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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Comprehensive Young Corporation has been operating successfully for several years. It is authorized to issue 24,000 shares of no-par common stock and 6,000 shares of 8%, $100 par preferred stock. The Contributed Capital section of its January 1, 2019, balance sheet is as follows:

Chapter 15, Problem 9P, Comprehensive Young Corporation has been operating successfully for several years. It is authorized , example  1

Part a. A shareholder has raised the following questions:

  1. 1. What is the legal capital of the corporation?
  2. 2. At what average price per share has the preferred stock been issued?
  3. 3. How many shares of common stock have been issued (the common stock has been issued at an average price of $23 per share)?

Part b. The company engaged in the following transactions in 2019:

Chapter 15, Problem 9P, Comprehensive Young Corporation has been operating successfully for several years. It is authorized , example  2

Required:

  1. 1. Answer the questions in Part a.
  2. 2. Prepare journal entries to record the transactions in Part b.
  3. 3. Prepare the Contributed Capital section of Young’s December 31, 2016, balance sheet.

1 (1)

To determine

Identify the legal capital of the corporation.

Explanation

Legal capital: It is an amount of capital which is restricted for the purpose of dividends and other distributions.

The legal capital of corporation is $374,000(

1 (2)

To determine

Identify the average issue price per share of the preferred stock

1 (3)

To determine

Identify the number of common stock have been issued.

2.

To determine

Prepare the journal entries to record the given transactions in part b.

3.

To determine

Prepare the contributed capital section of Corporation Y as on December 31, 2016.

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