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Chapter 13: Q20E (page 711)

Determining paid-in capital for a corporation

Aruba Corporation recently organized. The company issued common stock to an inventor in exchange for a patent with a market value of \(57,000. In addition, Aruba received cash for 6,000 shares of its \)10 par preferred stock at par value and 6,500 shares of its no-par common stock at $20 per share. Without making journal entries, determine the total paid-in capital created by these transactions.

Short Answer

Expert verified

The total paid-in capital created by the mentioned transactions is $247,000

Step by step solution

01

Basic Introduction

Common stock in patent exchange:$57,000

PreferredStockValue=NumberofShares脳ParValue=6,000脳$10=$60,000

CommonStock=NumberofShares脳ParValue=6,500脳$20=$130,000

02

Total paid-in capital

Totalpaid-incapital=Commonstockinpatentexchange+preferredstockvalue+commonstockissued=$57,000+$60,000+$130,000=$247,000

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Most popular questions from this chapter

Journalizing a stock dividend and reporting stockholders鈥� equity

The stockholders鈥� equity of Lakeside Occupational Therapy, Inc. on December 31, 2017, follows:

Common Stock鈥擻(1 Par Value; 1,200 shares

authorized, 400 shares issued and outstanding

Paid-In Capital:

120,000

400

2,000

Retained Earnings

Total Stockholders鈥� Equity \) 122,000

Stockholders鈥� Equity

Paid-In Capital in Excess of Par鈥擟ommon 1,600

Total Paid-In Capital

\(

On April 30, 2018, the market price of Lakeside鈥檚 common stock was \)16 per share and the company declared a 13% stock dividend. The stock was distributed on May 15.

Requirements

1. Journalize the declaration and distribution of the stock dividend.

2. Prepare the stockholders鈥� equity section of the balance sheet as of May 31, 2018. Assume Retained Earnings are $120,000 on April 30, 2018, before the stock dividend, and the only change made to Retained Earnings before preparing the balance sheet was closing the Stock Dividends account.

Identifying advantages and disadvantages of a corporation

Following is a list of advantages and disadvantages of the corporate form of business. Identify each quality as either an advantage or a disadvantage.

c. Transfer of ownership is easy.

A Identifying sources of equity, stock issuance, and dividends

Voyage Comfort Specialists, Inc. reported the following stockholders鈥� equity on its balance sheet at June 30, 2018:

Preferred Stock鈥�7%, ? Par Value; 625,000 shares

authorized, 280,000 shares issued and outstanding

Paid-In Capital:

\( 1,400,000

1,340,000

Stockholders鈥� Equity

Paid-In Capital in Excess of Par鈥擟ommon 2,900,000

Total Paid-In Capital 5,640,000

Retained Earnings 12,000,000

Total Stockholders鈥� Equity \) 17,640,000

Common Stock鈥擻(1 Par Value; 3,000,000 shares

authorized, 1,340,000 shares issued and outstanding

Requirements

4. No preferred dividends are in arrears. Journalize the declaration of a \)500,000 dividend at June 30, 2018, and the payment of the dividend on July 20, 2018. Use separate Dividends Payable accounts for preferred and common stock. An explanation is not required.

What is treasury stock? What type of account is Treasury Stock, and what is the account鈥檚 normal balance?

Question: Journalizing issuance of stock鈥攁t par and at a premium

Colorado Corporation has two classes of stock: common, \(3 par value; and preferred, \)30 par value.

Requirements

1. Journalize Colorado鈥檚 issuance of 4,500 shares of common stock for $6 per share.
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