Question

Corporations 735 Learning Objectives 2,4 P13-41A Journalizing stock issuance and cash dividends and preparing the stockholders' equity section of the balance sheet D Mobile Wireless needed additional capital to expand, so the business incorporated. The charter from the state of Georgia authorizes D-Mobile to issue 50,000 shares of 8%, $50 par value cumulative preferred stock and 160,000 shares of $4 par value common stock. During the first month, D-Mobile completed the following transactions: 2. Total Stockholders' Equity 5454,000 Oct. 2 6 9 10 issued 19,000 shares of common stock for a building with a market value of $240,000 Issued 600 shares of preferred stock for $140 per share. Issued 11,000 shares of common stock for cash of $55,000. Declared a $19,000 cash dividend for stockholders of record on Oct. 20. Use a separate Dividends Payable account for preferred and common stock Paid the cash dividend. 25 Requirements 1. Record the transactions in the general journal. 2. Prepare the stockholders' equity section of D-Mobile's balance sheet at October 31, 2018. Assume D-Mobile's net income for the month was $94,000.

Answer 1

Requirement 1:

Date	Accounts and Explanation	Debit	Credit
Oct.2	Building	240,000
	Common Stock ($4 x 19,000)		76,000
	Paid-In Capital in Excess of Par - Common($240,000-$76,000)		164,000
Oct.6	Cash ($140 x 600)	84,000
	Preferred Stock ($50 x 600)		30,000
	Paid-In Capital in Excess of Par --Preferred ($84,000-$30,000)		54,000
Oct.9	Cash	55,000
	Common Stock ($4 x 11,000)		44,000
	Paid-In Capital in Excess of Par---Common ($55,000 - $44,000)		11,000
Oct.10	Cash Dividends	19,000
	Dividends Payable - Preferred (600 sh x $50 x 8%)		2,400
	Dividends Payable - Common ($19,000 - $2,400)		16,600
Oct.25	Dividends Payable - Preferred	2,400
	Dividends Payable - Common	16,600
	Cash		19,000

Requirements 2:

D-MOBILE WIRELESS
Balance Sheet (Partial)
As of October 31,2018
Stockholder's Equity:
paid-in capital:
Cumulative Preferred Stock - 8%,$50 Par Value; 50,000 Shares authorized, 600 shares issued and outstanding	$30,000
Paid - In Capital in Excess of par -- Preferred	54,000
Common Stock - $4 Par Value; 160,000 shares authorized, 30,000 Shares issued and outstanding	120,000
Paid- in capital in Excess of par-- Common	175,000
Total Paid-In Capital	379,000
Retained Earnings	75,000
Total Stockholder's Equity	454,000

Working for requirement 2:

Common stock = $76,000+$44,000=$120,000

Paid in capital in excess of par common stock = $164,000+$11,000=$175,000

Retained earnings = Net income - Total dividend

= $94,000 - $19,000

= $75,000