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Chapter 13: Q2SE_1 (page 707)

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.

Short Answer

Expert verified

Answer

Cash will be debited with $27,000 and Common stock- $3 at par; Paid- in capital in excess of par will be credited with $13,500 individually.

Step by step solution

01

Basic calculation

CashReceived=NumberofShares脳ValuePerShare=4,500脳$6=$27,000CommonStock=NumberofShares脳ParValuePerShare=4,500脳$3=$13,500

02

Journals entry of issuance of stock

Date

Transaction

Debit

Credit

Cash

$27,000

Common stock- $3 at par

$13,500

Paid- in capital in excess of par

$13,500

To record 4,500 common stocks issued at $6.

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Most popular questions from this chapter

What account is used to record the premium when issuing common stock? What type of account is this?

Computing earnings per share and price/earnings ratio

Rocket Corp. earned net income of \(153,040 and paid the minimum dividend to preferred stockholders for 2018. Assume that there are no changes in common shares outstanding during 2018. Rocket鈥檚 books include the following figures:

Preferred Stock鈥�6%, \)60 par value; 2,000 shares authorized, 1,000

shares issued and outstanding \( 60,000

Common Stock鈥擻)5 par value; 80,000 shares authorized, 48,000 shares

issued, 46,700 shares outstanding 240,000

Paid-In Capital in Excess of Par鈥擟ommon 470,000

Treasury Stock鈥擟ommon; 1,300 shares at cost (26,000)

Requirements

1. Compute Rocket鈥檚 EPS for the year.

Computing earnings per share

HEB Corporation had net income for 2018 of \(60,450. HEB had 15,500 shares of common stock outstanding at the beginning of the year and 20,100 shares of common stock outstanding as of December 31, 2018. During the year, HEB declared and paid preferred dividends of \)2,600. Compute HEB鈥檚 earnings per share.

Question: Journalizing a small stock dividend

Element Water Sports has 13,000 shares of \(1 par value common stock outstanding.

Element distributes a 5% stock dividend when the market value of its stock is \)15 per share.

Requirements

1. Journalize Element鈥檚 declaration of the stock dividend on August 15 and distribution on August 31.

Journalizing issuance of stock

Steller Systems completed the following stock issuance transactions:

May 19 Issued 1,700 shares of \(3 par value common stock for cash of \)10.50 per share.

Jun. 3 Issued 300 shares of \(9, no-par preferred stock for \)15,000 cash.

11 Received equipment with a market value of \(68,000 in exchange for 5,000 shares of the \)3 par value common stock.

Requirements

1. Journalize the transactions. Explanations are not required.
See all solutions

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