1. Explanation Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system. Rules of Debit and Credit: Following rules are followed for debiting and crediting different accounts while they occur in business transactions: Debit , all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities. Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses. Issuance of stock: It refers to the number of shares that are sold to the stockholders from number of shares authorized for issuance by the company. Common stock: These are the ordinary shares that a corporation issues to the investors in order to raise funds. In return, the investors receive a share of profit from the profits earned by the corporation in the form of dividend Preferred stock : The stock that provides a fixed amount of return (dividend) to its stockholder before paying dividends to common stockholders is referred as preferred stock. Prepare journal entry to record the issuance of 6,500 shares of common stock to Person ‘R’ and issuance and 4,000 shares to Person ‘S’ on January 3 for cash of $11 per share. Date Account Titles and Explanation Debit ($) Credit ($) January 3 Cash 115,500 Common stock (1) 115,500 (To record the issuance of common stock to the founders of the business ) Table (1) Cash is an asset and it is increased. Therefore debit cash account by $115,500. Common stock is a component of stockholders’ equity and it is increased. Therefore credit common stock account by $ 115,500 Working notes: Calculate the value of common stock: Common stock = Number of shares issued × Issue price per share = 10 , 500 shares (2) × $11 = $115,500 (1) Calculate the total number of shares issued: Total number of shares issued = ( Shares issued to Person'R'+ Shares issued to Person 'S' ) = 6,500shares+4,000shares = 10 , 5 00shares (2) Prepare journal entry to record issuance of 1,000 shares of preferred stock to acquire a patent with a market value of $100,000 Date Account Titles and Explanation Debit ($) Credit ($) January 12 Patent 100,000 Preferred stock (3) 100,000 (To record the issuance of preferred stock to acquire patent ) Table (2) Patent is an asset and it is increased 2. To determine Prepare the stockholders’ equity section of Incorporation R & S’s balance sheet.

Financial Accounting, Student Value Edition (4th Edition)

4th Edition

ISBN: 9780134114811

Author: Robert Kemp, Jeffrey Waybright

Publisher: PEARSON

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Chapter 10, Problem 54BP

To determine

Record the transactions in the journal

To determine

Prepare the stockholders’ equity section of Incorporation R & S’s balance sheet.

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Chapter 10, Problem 53AP

Chapter 10, Problem 55BP

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Chapter 10 Solutions

Financial Accounting, Student Value Edition (4th Edition)

Ch. 10 - What are the four baste rights of stockholders?Ch. 10 - Assume you are a CFO of a company that is...Ch. 10 - Prob. 3DQ Ch. 10 - What accounts, if any, are involved in the journal...Ch. 10 - With which type of stock would dividends in...Ch. 10 - What accounts are affected by the declaration and...Ch. 10 - What are some of the reasons for issuing a stock...Ch. 10 - Prob. 8DQ Ch. 10 - What could you reasonably conclude if a company...Ch. 10 - Prob. 10DQ

Ch. 10 - Prob. 1SC Ch. 10 - Prob. 2SC Ch. 10 - Prob. 3SC Ch. 10 - Prob. 4SC Ch. 10 - Prob. 5SC Ch. 10 - Prob. 6SC Ch. 10 - Prob. 7SC Ch. 10 - Prob. 8SC Ch. 10 - Prob. 9SC Ch. 10 - Prob. 10SC Ch. 10 - Prob. 11SC Ch. 10 - Prob. 12SC Ch. 10 - Stockholders' equity terminology (Learning...Ch. 10 - Stock issuance (Learning Objective 3) 5-10 min....Ch. 10 - Issuance of stock for cash and noncash assets...Ch. 10 - Prob. 4SE Ch. 10 - Prob. 5SE Ch. 10 - Prob. 6SE Ch. 10 - Prob. 7SE Ch. 10 - Prob. 8SE Ch. 10 - Prob. 9SE Ch. 10 - Prob. 10SE Ch. 10 - Prob. 11SE Ch. 10 - Prob. 12SE Ch. 10 - Prob. 13SE Ch. 10 - Prob. 14SE Ch. 10 - Prob. 15AE Ch. 10 - Prob. 16AE Ch. 10 - Prob. 17AE Ch. 10 - Prob. 18AE Ch. 10 - Prob. 19AE Ch. 10 - Prob. 20AE Ch. 10 - Prob. 21AE Ch. 10 - Accounting for cash and stock dividends (Learning...Ch. 10 - Prob. 23AE Ch. 10 - Prob. 24AE Ch. 10 - Prob. 25AE Ch. 10 - Accounting for treasury stock (Learning Objectives...Ch. 10 - Prob. 27AE Ch. 10 - Prob. 28AE Ch. 10 - Prob. 29AE Ch. 10 - Prob. 30AE Ch. 10 - Prob. 31BE Ch. 10 - Prob. 32BE Ch. 10 - Prob. 33BE Ch. 10 - Prob. 34BE Ch. 10 - Prob. 35BE Ch. 10 - Prob. 36BE Ch. 10 - Prob. 37BE Ch. 10 - Accounting for cash and stock dividends (Learning...Ch. 10 - Prob. 39BE Ch. 10 - Prob. 40BE Ch. 10 - Accounting for treasury stock (Learning Objectives...Ch. 10 - Prob. 42BE Ch. 10 - Prob. 43BE Ch. 10 - Prob. 44BE Ch. 10 - Prob. 45BE Ch. 10 - Prob. 46BE Ch. 10 - Prob. 47AP Ch. 10 - Prob. 48AP Ch. 10 - Prob. 49AP Ch. 10 - Prob. 50AP Ch. 10 - Prob. 51AP Ch. 10 - Prob. 52AP Ch. 10 - Prob. 53AP Ch. 10 - Prob. 54BP Ch. 10 - Prob. 55BP Ch. 10 - Prob. 56BP Ch. 10 - Prob. 57BP Ch. 10 - Prob. 58BP Ch. 10 - Prob. 59BP Ch. 10 - Prob. 60BP Ch. 10 - Prob. 1CE Ch. 10 - Prob. 1CP Ch. 10 - Prob. 1EIA Ch. 10 - Case 2. The board of directors for Atlantic...Ch. 10 - Prob. 1FA Ch. 10 - Prob. 1IA Ch. 10 - Prob. 1SBA Ch. 10 - Prob. 1WC

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Record the transactions in the journal

Solution Summary: The author explains the rules of debiting and crediting different accounts while they occur in business transactions to abide by the double-entry system.

Record the transactions in the journal

Prepare the stockholders’ equity section of Incorporation R & S’s balance sheet.

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Chapter 10 Solutions