Question

On May 10, a company issued for cash 1,100 shares of no-par common stock (with a stated value of $2) at $15, and on May 15, it issued for cash 5,000 shares of $15 par preferred stock at $59. Journalize the entries for May 10 and 15, assuming that the common stock is to be credited with the stated value. If an amount box does not require an entry, leave it blank. May 10 May 15

Answer 1

Answer:n Please see explanation column

Explanation:

To record issue of common stock

Date          Account                          Debit                 Credit

May 10   Cash                               $16,500

            Common stock                                               $2,220

 Additional paid in excess of par common stock     $14,430

to record issue of preferred stock

May 15    Cash                          $295,000

  Preferred stock                                                         $75,000  

Additional paid in  excess of par preferred stock     $220,000                                                

Calculation.

Cash received  = no of shares issued x issue per share

         =1100 x $15= $16,500

Common stock = Number of share issue x stated value per share = 1,110 x $2 =$2,220

Additional paid in capital=  Number of shares issue x ( issue per share - stated value per share )= 1,110 x ($15-$2)= 1,110 x $13 = $14,430

Cash = no of shares of preferred stock  x issue per share

         =  5000 x $59= $295,000

par value at preferred stock n  = Number of share preferred  issue x stated value per share n= 5000 x 15 =$75,000

Additional paid in capital=  Number of sharesof preferred stock  issue x ( issue per share - stated value per share )= 5,000 x ($59-$15)= 5,000 x $44 = $220,000