Explanation On January 10, 80,000 shares are issued at $5 per share. The stated value is $1. The shares are issued for cash. The amount of cash received increases the asset and is debited to the cash account. Cash account is debited for ($5 × 80,000) = $400,000.The common stock account is credited with an amount equal to the stated value multiplied by the number of shares issued ($1 × 80,000) = $80,000. Any excess over the par value paid in by the stockholders in return of the shares issued to them is credited to the paid-in capital in excess of par account. So, the balance amount ($400,000 − $80,000) = $320,000 is credited to the paid-in capital in excess of par account. On March 1, 5,000 shares are issued at $108 per share. The par value is $100. The shares are issued for cash. The amount of cash received increases the asset and is debited to the cash account. Cash account is debited for ($108 × 5,000) = $540,000. The preferred stock account is credited with an amount equal to the par value multiplied by the number of shares issued ($100 × 5,000) = $500,000. Any excess over the par value paid in by the stockholders in return of the shares issued to them is credited to the paid-in capital in excess of par account. So, the balance amount ($540,000 − $500,000) = $40,000 is credited to the paid-in capital in excess of par account. On April 1, 24,000 shares were issued in exchange of land. Land account is debited with the fair value of land and the common stock account is credited with an amount equal to 24,000 shares × stated value of $1 = $24,000. The difference ($80,000 − $24,000) = $56,000 is credited to the paid-in capital in excess of stated value account. On May 1, 80,000 shares are issued at $7 per share. The stated value is $1. The shares are issued for cash. The amount of cash received increases the asset and is debited to the cash account. Cash account is debited for ($7 × 80,000) = $560,000. The common stock account is credited with an amount equal to the stated value multiplied by the number of shares issued ($1 × 80,000) = $80,000. Any excess over the par value paid in by the stockholders in return of the shares issued to them is credited to the paid-in capital in excess of par account...

Intermediate Accounting, Binder Ready Version

16th Edition

ISBN: 9781118742976

Author: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

Publisher: WILEY

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Question

Chapter 15, Problem 2E

To determine

Issue of common stock: Common stock represents equity ownership in a corporation. Common stockholders bear a higher amount of risk of loss and are also entitled to higher benefits in the company’s profits and assets. Common stock can be issued at par or at premium or discount.

No par stock is recorded in the accounts at issue price. However, some states require shares to be issued at a particular value. This value is called stated value. A company cannot issue shares below the stated value.

Common shares can be issued not only for cash but also in exchange of another asset or as a payment for an expense.

To prepare: To prepare the journal entry issue of common stock.

Given information: 1st issue: 80,000 shares at $5 per share.

2nd issue: 5,000 shares at $108 per share.

3rd issue: 24,000 shares for a land; asking price is $90,000 and fair value is $80,000.

4th issue: 80,000 shares at $7 per share.

5th issue: 10,000 shares for $50,000 attorney’s payment.

6th issue: 10,000 shares at $9 per share.

7th issue: 1,000 preferences at $112 per share.

Par value: No par.

Stated value: $1.

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Chapter 15, Problem 1E

Chapter 15, Problem 3E

Chapter 15 Solutions

Intermediate Accounting, Binder Ready Version

Ch. 15 - Prob. 1Q Ch. 15 - Prob. 2Q Ch. 15 - 3. Distinguish between common and preferred...Ch. 15 - 4. Why is the distinction between paid-in capital...Ch. 15 - Prob. 5Q Ch. 15 - Prob. 6Q Ch. 15 - Prob. 7Q Ch. 15 - Prob. 8Q Ch. 15 - Prob. 9Q Ch. 15 - Prob. 10Q

Ch. 15 - Prob. 11Q Ch. 15 - Prob. 12Q Ch. 15 - Prob. 13Q Ch. 15 - Prob. 14Q Ch. 15 - Prob. 15Q Ch. 15 - Prob. 16Q Ch. 15 - Prob. 17Q Ch. 15 - 18. Indicate how each of the following accounts...Ch. 15 - Prob. 19Q Ch. 15 - Prob. 20Q Ch. 15 - Prob. 21Q Ch. 15 - Prob. 22Q Ch. 15 - Prob. 23Q Ch. 15 - Prob. 24Q Ch. 15 - Prob. 25Q Ch. 15 - Prob. 26Q Ch. 15 - Prob. 27Q Ch. 15 - Prob. 28Q Ch. 15 - Prob. 29Q Ch. 15 - Prob. 1BE Ch. 15 - Prob. 2BE Ch. 15 - Prob. 3BE Ch. 15 - Prob. 4BE Ch. 15 - Prob. 5BE Ch. 15 - Prob. 6BE Ch. 15 - Prob. 7BE Ch. 15 - Prob. 8BE Ch. 15 - Prob. 9BE Ch. 15 - Prob. 10BE Ch. 15 - Prob. 11BE Ch. 15 - Prob. 12BE Ch. 15 - Prob. 13BE Ch. 15 - Prob. 14BE Ch. 15 - Prob. 15BE Ch. 15 - Prob. 1E Ch. 15 - Prob. 2E Ch. 15 - Prob. 3E Ch. 15 - Prob. 4E Ch. 15 - Prob. 5E Ch. 15 - Prob. 6E Ch. 15 - Prob. 7E Ch. 15 - Prob. 8E Ch. 15 - Prob. 9E Ch. 15 - Prob. 10E Ch. 15 - Prob. 11E Ch. 15 - Prob. 12E Ch. 15 - Prob. 13E Ch. 15 - Prob. 14E Ch. 15 - Prob. 15E Ch. 15 - Prob. 16E Ch. 15 - Prob. 17E Ch. 15 - Prob. 18E Ch. 15 - E15-19 (L04) (Comparison of Alternative Forms of...Ch. 15 - Prob. 20E Ch. 15 - *E15-21 (L05) (Preferred Dividends) The...Ch. 15 - Prob. 22E Ch. 15 - Prob. 23E Ch. 15 - Prob. 24E Ch. 15 - Prob. 1P Ch. 15 - Prob. 2P Ch. 15 - Prob. 3P Ch. 15 - Prob. 4P Ch. 15 - Prob. 5P Ch. 15 - Prob. 6P Ch. 15 - Prob. 7P Ch. 15 - Prob. 8P Ch. 15 - Prob. 9P Ch. 15 - Prob. 10P Ch. 15 - Prob. 11P Ch. 15 - Prob. 12P Ch. 15 - Prob. 1CA Ch. 15 - Prob. 2CA Ch. 15 - Prob. 3CA Ch. 15 - Prob. 4CA Ch. 15 - Prob. 5CA Ch. 15 - Prob. 6CA Ch. 15 - Prob. 7CA Ch. 15 - Prob. 1UJ Ch. 15 - Prob. 2UJ Ch. 15 - Prob. 3UJ Ch. 15 - Prob. 4UJ Ch. 15 - Prob. 1CE Ch. 15 - Prob. 2CE Ch. 15 - Prob. 3CE Ch. 15 - Prob. 4CE Ch. 15 - Prob. 1CRC Ch. 15 - Prob. 1IST Ch. 15 - Prob. 2IST Ch. 15 - Prob. 3IST Ch. 15 - Prob. 4IST Ch. 15 - Prob. 5IST Ch. 15 - Prob. 1ICA Ch. 15 - Prob. 2ICA Ch. 15 - Prob. 3ICA Ch. 15 - Prob. 4ICA Ch. 15 - Prob. 5ICA Ch. 15 - Prob. 6ICA Ch. 15 - Prob. 7ICA Ch. 15 - Prob. 8ICA Ch. 15 - Prob. 9ICA Ch. 15 - Prob. 10ICA Ch. 15 - Prob. 11ICA Ch. 15 - Prob. 12ICA Ch. 15 - Prob. 13ICA

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