Question

2017, and 2018. mu dividends per share paid to each class of stock in 2016, Stockholders Equity Transactions and Balance Sheet Presentation Torey Corporation was anized on April 1, with an authorization of 25.000 shares of six percent. $50 par value pretened stock and 200,000 shares of » par value common stock. During April, the following transactions affecting stockholders' equity occurred: LO4,8 Apr. 1 Issued 80,000 shares of common stock at $40 cash per share. 3 Issued 2,000 shares of common stock to attorneys and promoters in exchange for their services in organizing the corporation. The services were valued at $31.000. 8 Issued 3,000 shares of common stock in exchange for equipment with a fair market value of $55,000. 20 Issued 6,000 shares of preferred stock for cash at $80 per share. Required a. Prepare journal entries to record the above transactions. b. Prepare the stockholders' equity section of the balance sheet at April 30. Assume that the net income for April is $60,000.

Answer 1

Requirement a:

Date	Account title and explanation	Debit	Credit
Apr. 1	Cash (80,000 x $40)	3,200,000
	Common stock (80,000 x $5)		400,000
	Paid in capital in excess of par-Common stock		2,800,000
Apr. 3	Organization expense	31,000
	Common stock (2,000 x $5)		10,000
	Paid in capital in excess of par-Common stock		21,000
Apr. 8	Equipment	55,000
	Common stock (3,000 x $5)		15,000
	Paid in capital in excess of par-Common stock		40,000
Apr. 20	Cash (6,000 x $80)	480,000
	Preferred stock (6,000 x $50)		300,000
	Paid in capital in excess of par-Preferred stock		180,000

Requirement b:

Torey Corporation
Balance sheet (Stockholders' equity section)
At April 30
Stockholders' equity:
Paid in capital:
Capital stock:
Preferred stock, $50 par value, 25,000 shares authorized; 6,000 shares issued	300,000
Common stock, $5 par value, 200,000 shares authorized; 85,000 shares issued	425,000
Total capital stock		725,000
Additional paid in capital:
Paid in capital in excess of par-Preferred stock	180,000
Paid in capital in excess of par-Common stock	2,861,000
Total additional paid in capital		3,041,000
Total paid in capital		3,766,000
Add: Retained earnings		60,000
Total stockholders' equity		3,826,000