Answer:
Cash $892,500 (debit)
Common Stock $17,500 (credit)
Share Premium $875,000 (credit)
Explanation:
For par value shares, any price paid above the par value on stock issued is accounted for in the Share Premium Reserve.
Note from this question $25 is paid over and above the par value of $0.25, thus it is accounted in share premium reserve.
Journal entries are the entries that are recorded to maintain the daily record of the cash inflow and outflow of the firm. The inflow and outflow is recorded in order to avoid chaos in the accounting of the firm.
The Journal entry to record the above transaction is:
Cash $892,500 (debit)
Common Stock $17,500 (credit)
Share Premium $875,000 (credit)
(Being the entry for the issue of stock has been recorded)
Whatever amount paid far above common shares on stock issued is accounted for in the Owner's Equity Reservation for par value shares.
Because $25 is paid over and above the par value of $0.25 in this question, it is compensated for in the share premium reserve.
To know more about the Journal entries, refer to the link below:
https://brainly.com/question/15691473
