Question

Entries for Issuing Par Stock On January 22, Jefferson County Rocks Inc., a marble contractor, issued for cash 55,000 shares of $15 par common stock at $51, and on February 27, it issued for cash 110,000 shares of preferred stock, $5 par at $8. a. Journalize the entries for January 22 and February 27. If an amount box does not require an entry, leave it blank. Jan. 22 Cash ✓ Common Stock Paid-In Capital in Excess of Par-Common Stock Feb. 27 Cash Preferred Stock Paid-In Capital in Excess of Par-Preferred Stock Feedback Check My Work Recall that a separate account is used for recording the amount of each class of stock issued to investors in a corporation. Recall the definition of legal capital and what affect that has on recording the sale of stock b. What is the total amount invested (total paid-in capital) by all stockholders as of February 27?

Answer 1

a.

Date	General journal	Debit	Credit
Jan. 22	Cash	2,805,000
	Common Stock		825,000
	Paid- in capital excess of par- common stock		1,980,000

Date	General journal	Debit	Credit
Jan. 22	Cash	880,000
	Preferred Stock		550,000
	Paid- in capital excess of par- preferred stock		330,000

Common stock to be credited with = Number of shares issued x Par value of 1 share

= 55,000 x 15

= $825,000

Additional paid in capital - common stock to be credited with = Number of shares issued x ( Issue price - Par value )

= 55,000 x (51-15)

= $1,980,000

Preferred stock to be credited with = Number of shares issued x Par value of 1 share

= 110,000 x 5

= $550,000

Additional paid in capital - preferred stock to be credited with = Number of shares issued x ( Issue price - Par value )

= 110,000 x (8-5)

= $330,000

b.

Total invested capital = Cash receipts from issued common stock + Cash receipts from issued common stock

= 2,805,000+880,000

= $3,685,000

a.

Date	General journal	Debit	Credit
Jan. 22	Cash	2,700,000
	Common Stock		675,000
	Paid- in capital excess of par- common stock		2,025,000

Date	General journal	Debit	Credit
Jan. 22	Cash	1,540,000
	Preferred Stock		1,400,000
	Paid- in capital excess of par- preferred stock		140,000

Common stock to be credited with = Number of shares issued x Stated value of 1 share

= 135,000 x 5

= $675,000

Additional paid in capital - common stock to be credited with = Number of shares issued x ( Issue price - Stated value )

= 135,000 x (20-5)

= $2,025,000

Preferred stock to be credited with = Number of shares issued x Par value of 1 share

= 20,000 x 70

= $1,400,000

Additional paid in capital - preferred stock to be credited with = Number of shares issued x ( Issue price - Par value )

= 20,000 x (77-70)

= $140,000

b.

Total invested capital = Cash receipts from issued common stock + Cash receipts from issued common stock

= 2,700,000+1,540,000

= $4,240,000

Kindly comment if you need further assistance.

Thanks‼!