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Chapter 13: Q5SE (page 708)

Journalizing issuance of stock for assets other than cash

Cedar Corporation issued 36,000 shares of \(1 par value common stock in exchange for a building with a market value of \)160,000. Record the stock issuance.

Short Answer

Expert verified

Building will be debited with $160,000; Common stock- $1 par value will be credited with $36,000 and Paid-in capital in excess of par will be credited with $124,000.

Step by step solution

01

Basic Introduction-

Value of building: $160,000

CommonStock=NumberofShares脳ParValuePerShare=36,000脳$1=$36,000

02

Journal entry of issuance of common stock

Date

Transaction

Debit

Credit

Building

$160,000

Common stock- $1 par value

$36,000

Paid-in capital in excess of par

$124,000

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Most popular questions from this chapter

Computing rate of return on common stockholders鈥� equity Wyler, Inc.鈥檚 2018 balance sheet reported the following items鈥攚ith 2017 figures given for comparison:

Total Assets Total Liabilities and Stockholders鈥� Equity Total Liabilities Total Stockholders鈥� Equity (all common) WYLER, INC. Balance Sheet As of December 31, 2018, and December 31, 2017 \( 39,600 December 31, 2018 17,100 22,500 18,500 14,962 December 31, 2017 \) 39,600 \( 33,462 \) 33,462 Net income for 2018 was $3,690.

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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.

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.

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Journalizing issuance of stock and preparing the stockholders鈥� equity section of the balance sheet

The charter for ASAP-TV, Inc. authorizes the company to issue 100,000 shares of \(5, no-par preferred stock and 500,000 shares of common stock with \)1 par value. During its start-up phase, ASAP-TV completed the following transactions:

Sep. 6 Issued 550 shares of common stock to the promoters who organized the corporation, receiving cash of \(16,500.

12 Issued 400 shares of preferred stock for cash of \)23,000.

14 Issued 1,500 shares of common stock in exchange for land with a market value of $17,000.

Requirements

1. Record the transactions in the general journal.

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

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