Question

Newly formed S&J Iron Corporation has 137,000 shares of $5 par common stock authorized. On March 1, 2018, S&J Iron issued 8,500 shares of the stock for $12 per share. On May 2, the company issued an additional 18,000 shares for $20 per share. S&J Iron was not affected by other events during 2018.

Required:

1. Record the transactions in a horizontal statements model. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). If an element was not affected by the event, leave the cell blank.
2. Determine the amount S&J Iron would report for common stock on the December 31, 2018, balance sheet.
3. Determine the amount S&J Iron would report for paid-in capital in excess of par.
4. What is the total amount of capital contributed by the owners?
5. What amount of total assets would S&J Iron report on the December 31, 2018, balance sheet?

Record the transactions in a horizontal statements model. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). If an element was not affected by the event, leave the cell blank.

	S&J IRON CORPORATION Horizontal Statements Model Balance Sheet Income Statement Event Assets = Liabilities + Stockholders’ Equity Revenue – Expense = Net Income Cash Flow Cash = + Common Stock + PIC in Excess – = March 1 = + + – = May 2 = + + – =

b. Determine the amount S&J Iron would report for common stock on the December 31, 2018, balance sheet.
c. Determine the amount S&J Iron would report for paid-in capital in excess of par.
d. What is the total amount of capital contributed by the owners?
e. What amount of total assets would S&J Iron report on the December 31, 2018, balance sheet?

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	b. Common stock c. Paid-in capital in excess of par d. Total paid-in capital e. Total assets

Answer 1

a.

S&J IRON CORPORATION

Horizontal Statements Model

Balance Sheet

Income Statement

Event

Assets

=

Liabilities

+

Stockholders' Equity

Revenue

-

Expense

=

Net Income

Cash Flow

Cash

=

+

Common Stock

+

PIC in Excess

-

=

March 1

102000

=

+

42500

+

59500

-

=

102000

FA

May 2

360000

=

+

90000

+

270000

-

=

360000

FA

On December 31, 2018 balance sheet:

b.	Common stock	$ 132,500
c.	Paid-in capital in excess of par	$ 329,500
d.	Total paid-in capital	$ 462,000
e.	Total assets	$ 462,000