# Wingra Corporation was organized in March. It is authorized to issue 500,000 shares of $100 par value 8% preferred stock. It is also authorized to issue 750,000 shares of$1 par value common stock. In its first year, the corporation has the following transactions: Journalize the transactions.

FindFindarrow_forward

### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

#### Solutions

Chapter
Section
FindFindarrow_forward

### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 14, Problem 4PA
Textbook Problem
1 views

## Wingra Corporation was organized in March. It is authorized to issue 500,000 shares of $100 par value 8% preferred stock. It is also authorized to issue 750,000 shares of$1 par value common stock. In its first year, the corporation has the following transactions:Journalize the transactions.

To determine

To journalize:

The transactions related to issue of common and preferred stock.

Introduction:

Common stock is owners’ capital contributed in the business. Holders of the common stock reserve right to participate in voting. Profits are distributed to common stock holders and they receive assets in the event of dissolution of the company.

Preferred stock-holders have the preferential right over the common stock-holders to receive the dividend at a specified rate and repayment of principle in the event of dissolution of firm.

### Explanation of Solution

Record issuance of preferred-stock:

 Date Account Title and Explanation Post Ref. Debit ($) Credit($) March,1 Cash ($115×10,000) 1,150,000 Additional paid-in capital from preferred-stock ($15×10,000) 150,000 Preferred-Stock ($100×10,000) 1,000,000 (To record issuance of$100 par value preferred-stock for cash.)

Table (1)

• Cash is an asset and it is increased by $1,150,000. Therefore, cash account is debited with$1,150,000.
• Additional paid-in capital from preferred-stock is capital and it is increased by $150,000. Therefore, Additional paid-in capital from preferred-stock is credited with$150,000.
• Preferred-Stock is capital and it is increased by $1,000,000. Therefore, Preferred-Stock is credited with$1,000,000.

Record issuance of common-stock:

 Date Account Title and Explanation Post Ref. Debit ($) Credit($) March,2 Cash ($12.50×120,000) 1,500,000 Additional paid-in capital from common stock ($11.50×120,000) 1,380,000 Common Stock ($1×120,000) 120,000 (To record issuance of$1 par value common-stock for cash.)

Table (2)

• Cash is an asset and it is increased by $1,500,000. Therefore, cash account is debited with$1,500,000.
• Additional paid-in capital from common-stock is capital and it is increased by $1,380,000. Therefore, Additional paid-in capital from common-stock is credited with$1,380,000.
• Common-Stock is capital and it is increased by $120,000. Therefore, Common-Stock is credited with$120,000.

Record issuance of common-stock:

 Date Account Title and Explanation Post Ref. Debit ($) Credit($) April,10 Equipment 195,996 Additional paid-in capital from common-stock ($11×16,333) 179,663 Common-Stock1 ($1×16,333) 16,333 (To record issuance of $1 par value common-stock for equipment.) Table (3) • Equipment is an asset and it is increased by$195,996. Therefore, equipment account is debited with \$195,996

### Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

#### The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Find more solutions based on key concepts
2. What does a share of stock represent?

Cornerstones of Financial Accounting

What is the primary purpose of the statement of the cash flow?

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

What are liquidity ratios? Leverage ratios? Profitability ratios.

Managerial Accounting: The Cornerstone of Business Decision-Making

What is a remittance advice (RA)?

Accounting Information Systems

CURRENT YIELD, CAPITAL GAINS YIELD, AND YIELD TO MATURITY Hooper Printing Inc. has bonds outstanding with 9 yea...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)