Question

3-P13-1A -ASSIGMENT CAPM 14 PAGE 622 Alexia Corporation was organized on January 1, 2012. It is authorized to issue 10,000 shares of 8%, $100 par value preferred stock, and 500,000 shares of no-par common stock with a stated value of $2 per share. The following stock transactions were completed during the fi rst year. Jan. 10 Issued 80,000 shares of common stock for cash at $4 per share. Mar. 1 Issued 5,000 shares of preferred stock for cash at $105 per share. Apr. 1 Issued 24,000 shares of common stock for land. The asking price of the land was $90,000. The fair value of the land was $85,000. May 1 Issued 80,000 shares of common stock for cash at $4.50 per share. Aug, 1 Issued 10,000 shares of common stock to attorneys in payment of their ill of $30,000 for services provided in helping the company organize. Sept. 1 Issued 10,000 shares of common stock for cash at $5 per share. Nov. 1 Issued 1,000 shares of preferred stock for cash at $109 per share. Instructions (a) Journalize the transactions.

Answer 1

In Jan 10, the stated par value is $2 per share and the 80000 shares are issued at $4 per share. So, that's why the common stock account is credited by (80000*$2) =1,60,000 and the excess value is credit with paid in excess of stated value of common stock with the remaining$2(80000*$2)=1,60,000 and total is debited with cash $3,20,000.

In May 1, 5000 shares of preferred stock for cash at $105 per share. So, the preferred stock is credited with$100 share of 5000( 5000*$100)=5,00,000 and the excess $5 is credited with paid in capital in excess of par -PS (5000*$5)=25,000 and the total of both credit amount is debited with cash account for$5,25,000.

In April 1, issued 24000 shares of common stock for land at fair value of$85,000. So, the common stock is credited with (24000*$2)=$48,000 and the excess remaining is credited with paid in capital in excess of stated value-CS for $37,000($85,000-$48,000) and the total amount of credit is debited for$85,000.

In May 1, issued 80,000 share of common stock for cash at$4.50 per share. So, the common stock is credited with$2 (80000*$2)=1,60,000 and the excess of stated value i.e,$2.5 is credited with paid in capital in excess of stated value-CS(80000*$2.5)=$2,00,000. And the total amount of credit is debited with cash account for $ 3,60,000.

In Aug1, issued 10,000 share of common stock to attorneys in payment of their bill of $30,000. So, the common stock of $2 is credited for $20,000(10000*$2)=20,000 and the excess amount remaining is credited with paid in capital in excess of stated value-CS i.e $10,000 and the total amount of credit i.e 30000 is debited with Organization expense.

In Sep1, issued 10,000 share of common stock for cash $5 per share. So, the common stock is credited with stated value $2 per share for$20,000(10,000*$2) and the excess amount remaining will be credited with paid in capital in excess of stated value -CS for $30,000(10000*$3) and the total amount of Credit i.e$50,000 is debited with cash account.

In Nov1, Issued 1,000 share of preferred stock for cash at $109. So, the preferred stock is credited with the par value I.e$100 for $100000(1000*$100) and the excess of par value i.e $9 is credited with paid in capital in excess of par value -PS for $9,000(1000*$9) and the total amount of credit i.e$1,09,000 is debited with cash for$1,09,000.