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Chapter 15: Question 1BE (page 811)

Buttercup Corporation issued 300 shares of \(10 par value common stock for \)4,500. Prepare Buttercup’s journal entry.

Short Answer

Expert verified

In Buttercup Corporation's book, cash is debited.

Common stock and paid-in capital in excess of par common stock are credited.

Step by step solution

01

Meaning of Common Stock

The term "common stock" refers to a type of security that represents a corporation's ownership. Common investors elect the board of directors, and they also have a say in business decisions.

02

Passing journal entry of Buttercup’s

Date

Particular

Folio

Debit USD

Credit USD

Cash A/c

4,500

To common Stock (300 x $10)

3,000

To paid-in capital in excess of

par common stock

1,500

(being share issued at par)

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Most popular questions from this chapter

Ravonette Corporation issued 300 shares of \(10 par value common stock and 100 shares of \)50 par value preferred stock for a lump sum of \(13,500. The common stock has a market price of \)20 per share, and the preferred stock has a market price of $90 per share. Prepare the journal entry to record the issuance.

On February 1, 2017, Buffalo Corporation issued 3,000 shares of its \(5 par value common stock for land worth \)31,000. Prepare the February 1, 2017, journal entry.

(Computation of Book Value per Share) Morgan Sondgeroth Inc. began operations in January 2015 and reported the following results for each of its 3 years of operations.

2015 \(260,000net loss 2016 \)40,000 net loss 2017 \(800,000 net income

At December 31, 2017, Morgan Sondgeroth Inc. capital accounts were as follows.

8% cumulative preferred stock, par value \)100;

authorized, issued, and outstanding 5,000 shares \(500,000

Common stock, par value \)1.00; authorized 1,000,000 shares;

issued and outstanding 750,000 shares \(750,000

Morgan Sondgeroth Inc. has never paid a cash or stock dividend. There has been no change in the capital accounts since Sondgeroth began operations. The state law permits dividends only from retained earnings.

Instructions

  1. Compute the book value of the common stock on December 31, 2017.
  2. Compute the book value of the common stock on December 31, 2017, assuming that the preferred stock has a liquidating value of \)106 per share.

In the absence of restrictive provisions, what are the basic rights of stockholders of a corporation?

Where can authoritative IFRS guidance related to stockholders’ equity be found?
See all solutions

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