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Chapter 13: Q2SE_1 (page 707)

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

1. Journalize Colorado’s 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×ValuePerShare=4,500×$6=$27,000CommonStock=NumberofShares×ParValuePerShare=4,500×$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

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

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

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

authorized, 325,000 shares issued and outstanding

Paid-In Capital:

\( 1,300,000

1,350,000

Stockholders’ Equity

Paid-In Capital in Excess of Par—Common 2,600,000

Total Paid-In Capital 5,250,000

Retained Earnings 11,800,000

Total Stockholders’ Equity \) 17,050,000

Common Stock—$1 Par Value; 7,000,000 shares

authorized, 1,350,000 shares issued and outstanding

Requirements

1. Identify the different classes of stock that Tillman Comfort Specialists has outstanding.

If stock is issued for assets other than cash describe the recording of this transaction

On August 1, Hagino Corporation declared a $1.50 per share cash dividend on its common stock (20,000 shares) for stockholders on record as of August 15. Hagino paid the dividend on August 31. Journalize the entries declaring the cash dividend and paying the dividend.

What is a stock dividend?

Question: Accounting for cash dividends

Java Company earned net income of \(85,000 during the year ended December 31, 2018. On December 15, Java declared the annual cash dividend on its 4% preferred stock (par value, \)120,000) and a $0.25 per share cash dividend on its common stock (50,000 shares). Java then paid the dividends on January 4, 2019.

Requirements

1. Journalize for Java the entry declaring the cash dividends on December 15, 2018.
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