Question

Below are several activities and events of Cumberland Corporation for its first year in business 2018: October 10 Filed Articles of Incorporation with the Secretary of State. The Articles authorize 10,000 shares of S1 par common stock and 1,000 shares of cumulative, 10%, $50 par value preferred stock. October 15 October 20 October 21 Required: 1. Issue 4,000 shares of common stock for $5 cash per share. Issue 200 shares of preferred stock for $12,000. Issued an additional 3,000 shares of common stock for $18,000 cash. Journalize the transactions listed above. Prepare at October 31st 2018 the Shareholder's Equity section of the balance sheet assuming net income for October was $50,000. 2.

Answer 1

Journal entries

Date	account and explanation	debit	credit
Oct 10	No entry
Oct 15	Cash (4000*5)	20000
	Common Stock		4000
	Paid in capital in excess of par value-Common Stock		16000
	(To record issue common stock)
Oct 20	Cash	12000
	Preferred stock (200*50)		10000
	Paid in capital in excess of par value-Preferred stock		2000
	(To record issue preferred stock)
Oct 21	Cash	18000
	Common Stock (3000*1)		3000
	Paid in capital in excess of par value-Common Stock		15000
	(To record issue common stock)

Stockholder's equity section :

Paid in capital
Common Stock	7000
Paid in capital in excess of par value-Common Stock	31000
Preferred stock	10000
Paid in capital in excess of par value-Preferred Stock	2000
Total Paid in Capital		50000
Retained earnings		50000
Total Stockholder's equity		100000