Analyzing & Identifying Financial Statement Effects of Stock IssuancesOn September 1, Maggiolo Inc. (a) issues 18,000 shares of $10 par value preferred stock at $48 cash per share and (b) issues 120,000 share of $2 par value common stock at $37 cash per share.a. Using the financial statement effect template, illustrated the effect of these two issuances.b. Prepare the journal entries for the two issuancesc. Post journal entries from b to related T -accounts.

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Asked Nov 26, 2019
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Analyzing & Identifying Financial Statement Effects of Stock Issuances
On September 1, Maggiolo Inc. (a) issues 18,000 shares of $10 par value preferred stock at $48 cash per share and (b) issues 120,000 share of $2 par value common stock at $37 cash per share.
a. Using the financial statement effect template, illustrated the effect of these two issuances.
b. Prepare the journal entries for the two issuances
c. Post journal entries from b to related T -accounts.

 

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Expert Answer

Step 1

a.

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Financial Statement Effect Balance sheet Income statement ExpensesNet income Revenue Assets Statement of Event Paid in capital in Preferred stockCommon stock +excess of par- Preferred stock 684,000+ Paid in capital in excess of par- | Liabilities cash flows Cash Common stock 864,000 4,440,000 FA 864,000 (a) 180,000 FA 4,440,000 (b) 4,200,000 240,000 Note: FA-Financing Activity

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Step 2

b.

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Account title and explanation Date Debit Credit Sept.1 Cash (18,000x$48) S 864,000 Preferred stock (18,000x$10) Paid in capital in excess of par-Prefered stock To record the issuance of preferred stock) $ 180,000 $ 684,000 Sept.1 Cash (120,000x$37) S 4,440,000 Common stock (120,000x$2) S 240,000 $ 4,200,000 Paid in capital in excess of par-Common stock |(To record the issuance of common stock)

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