Question

On February 12, Quality Carpet Inc., a carpet wholesaler, issued for cash 730,000 shares of no-par common stock (with a stated value of $1.70) at $4.70, and on August 3, it issued for cash 24,700 shares of preferred stock, $45 par at $61.

Required:

A.	Journalize the entries for February 12 and August 3, assuming that the common stock is to be credited with the stated value. Refer to the Chart of Accounts for exact wording of account titles.
B.	What is the total amount invested (total paid-in capital) by all stockholders as of August 3?

Answer 1

Date	Account title	Debit	credit
February 12	cash (730000*4.7)	3,431,000
	common stock (730000*1.7)		1,241,000
	paid in capital in excess of stated value -common stock		2,190,000
August 3	cash (24700*61)	1,506,700
	Preferred stock (24700 * 45)		1,111,500
	Paid in capital in excess of par value -preferred stock		395,200

b)

	Paid in capital
Preferred stock	1,111,500
paid in capital in excess of par value -preferred stock	395,200
common stock	1,241,000
paid in capital in excess of stated value -common stock	2,190,000
Total paid in capital	4,937,700