Learning Materials
Features
Discover
Chapter 13: 6RQ (page 707)
What is par value?
Par value or nominal value is considered as the face value of a stock stated in the corporate charter. It is often set at a very price, for instance, $10.
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
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.
g. Government regulation is expensive
Accounting for a stock split
Decor and More Imports recently reported the following stockholders’ equity:
Common Stock—\(1 Par Value; 490,000,000 shares
authorized, 119,000,000 shares issued and outstanding
Paid-In Capital:
654,000,000
\) 119,000,000
267,000,000
Retained Earnings
Total Stockholders’ Equity \( 921,000,000
Stockholders’ Equity
Paid-In Capital in Excess of Par—Common 148,000,000
Total Paid-In Capital
Suppose Decor and More split its common stock 2-for-1 in order to decrease the market price per share of its stock. The company’s stock was trading at \)17 per share immediately before the split.
Requirements
1. Prepare the stockholders’ equity section of the Decor and More Imports balance sheet after the stock split.
Journalizing issuance of stock and preparing the stockholders’ 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 \(17,000.
Requirements
1. Record the transactions in the general journal.
2. Prepare the stockholders’ equity section of the ASAP-TV balance sheet atSeptember 30, 2018, assuming ASAP-TV, Inc. had net income of \)38,000 for the month.
A Identifying sources of equity, stock issuance, and dividends
Voyage Comfort Specialists, Inc. reported the following stockholders’ equity on its balance sheet at June 30, 2018:
Preferred Stock—7%, ? Par Value; 625,000 shares
authorized, 280,000 shares issued and outstanding
Paid-In Capital:
\( 1,400,000
1,340,000
Stockholders’ Equity
Paid-In Capital in Excess of Par—Common 2,900,000
Total Paid-In Capital 5,640,000
Retained Earnings 12,000,000
Total Stockholders’ Equity \) 17,640,000
Common Stock—$1 Par Value; 3,000,000 shares
authorized, 1,340,000 shares issued and outstanding
Requirements
1. Identify the different classes of stock that Voyage Comfort Specialists has outstanding.
Question: Journalizing issuance of stock—at par and at a premium
Colorado Corporation has two classes of stock: common, \(3 par value; and preferred, \)30 par value.
Requirements
2. Journalize Colorado’s issuance of 4,500 shares of preferred stock for a total of $135,000
What do you think about this solution?
We value your feedback to improve our textbook solutions.
Explanations 
Textbooks 
Exams 
GCSE 
IGCSE 
AS 
A Level 
International A Level 
University Admissions Tests 
Flashcards 
Vaia AI 
Notes 
Study Plans 
Study Sets 
Find a job 
Find a degree 
Student Deals 
Magazine 
Mobile App