Stock Rights, Retained Earnings

Question 1

What is the JE for stock rights?

Answer 1

-Cr. Equity at exercise price not market price when rights exercised, D r. Cash

Question 2

What’s the accounting for stock rights issue to outside parties for services?

Answer 2

• At issuance of rights, Dr. Expense and Cr. Equity for difference between market and exercise price times number of shares under option
• At exercise record at exercise price