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Chapter 13: Q4SE (page 708)

Journalizing issuance of stock鈥攕tated value

Nelson Corporation issued 9,000 shares of \(3 stated value common stock for \)11 per share on July 7. Record the stock issuance.

Short Answer

Expert verified

Cash will be debited with $99,000; Common stock- $3 Par value will be credited with $27,000 and Paid-in Capital in excess of shares will be credited with $72,000.

Step by step solution

01

Basic calculation

CashReceived=NumberofShares脳ValuePerShare=9,000脳$11=$99,000

CommonStock=NumberofShares脳ParValuePerShare=9,000脳$3=$27,000
02

Journal entry of issuance of common stock

Date

Transaction

Debit

Credit

Cash

$99,000

Common stock- $3 Par value

$27,000

Paid-in Capital in excess of shares

$72,000

To record common stock issued

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Most popular questions from this chapter

Question: Identifying sources of equity, stock issuance, and dividends

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

Preferred Stock鈥�5%, ? Par Value; 625,000 shares

authorized, 325,000 shares issued and outstanding

Paid-In Capital:

\( 1,300,000

1,350,000

Stockholders鈥� Equity

Paid-In Capital in Excess of Par鈥擟ommon 2,600,000

Total Paid-In Capital 5,250,000

Retained Earnings 11,800,000

Total Stockholders鈥� Equity \) 17,050,000

Common Stock鈥�$1 Par Value; 7,000,000 shares

authorized, 1,350,000 shares issued and outstanding

Requirements

2. What is the par value per share of Tillman Comfort Specialists鈥� preferred stock?

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�$1 Par Value; 3,000,000 shares

authorized, 1,340,000 shares issued and outstanding

Requirements

3. Make two summary journal entries to record issuance of all the Voyage Comfort Specialists鈥� stock for cash. Explanations are not required.

Journalizing dividend and treasury stock transactions, preparing a statement of retained earnings, and preparing stockholders鈥� equity

The balance sheet of Goldstein Management Consulting, Inc. at December 31, 2017, reported the following stockholders鈥� equity:

Common Stock鈥擻(10 Par Value; 350,000 shares

authorized, 32,000 shares issued and outstanding

Paid-In Capital:

160,000

\) 320,000

650,000

Retained Earnings

Total Stockholders鈥� Equity \( 810,000

Stockholders鈥� Equity

Paid-In Capital in Excess of Par鈥擟ommon 330,000

Total Paid-In Capital

During 2018, Goldstein completed the following selected transactions:

Feb. 6 Declared a 15% stock dividend on common stock. The market value of

Goldstein鈥檚 stock was \)25 per share.

15 Distributed the stock dividend.

Jul. 29 Purchased 2,300 shares of treasury stock at \(25 per share.

Nov. 27 Declared a \)0.10 per share cash dividend on the common stock outstanding.

Requirements

3. Prepare the stockholders鈥� equity section of the balance sheet at December 31, 2018.

What is a stock dividend?

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.
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