Question

Exercise 11-8A Effect of issuing common stock on the balance sheet LO 11-4

Newly formed S&J Iron Corporation has 151,000 shares of $7 par common stock authorized. On March 1, Year 1, S&J Iron issued 8,500 shares of the stock for $12 per share. On May 2, the company issued an additional 17,000 shares for $20 per share. S&J Iron was not affected by other events during Year 1.

Required
a. Record the transactions in a horizontal statements model. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Use NA to indicate that an element was not affected by the event.

PLEASE SHOW ALL WORK

Exercise 11-8A Effect of issuing common stock on the balance sheet LO 11-4 Newly formed S&J Iron Corporation has 151,000 shares of $7 par common stock authorized. On March 1, Year 1, S&J Iron issued 8,500 shares of the stock for $12 per share. On May 2, the company issued an additional 17,000 shares for $20 per share. S&J Iron was not affected by other events during Year 1. Required a. Record the transactions in a horizontal statements model. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Use NA to indicate that an element was not affected by the event. cashFiowc m,or financing activity ( Balance Sheet Income Statement Liabilities Stockholders' Equity Cash Flow AssetsLiabilities+ Revenue ExpenseNet Income Common + PIC in Excess Event March 1 May 2 Cash Stock b. Determine the amount S&J Iron would report for common stock on the December 31, Year 1, balance sheet. c. Determine the amount S&J Iron would report for paid-in capital in excess of par. d. What is the total amount of capital contributed by the owners? e. What amount of total assets would S&J Iron report on the December 31, Year 1, balance sheet? b. Common stock c. Paid-in capital in excess of par d. Total paid-in capital e. Total assets f. Prepare journal entries to record the March 1 and May 2 transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the issue of common stock. Note: Enter debits before credits. Date General Journal Debit Credit March 01 Record entry Clear entry View general journal

Answer 1

a)		Balance Sheet						Income Statement
		Asset	=	Liabilities	+	Stockholder's equity		Revenue	-	Expense	=	Net Income	Cash Flow
	Event	Cash	=			Common Stock	PIC in excess
	Mar-01	$ 102,000.00		$            -		$    59,500.00	$    42,500.00	$            -		$            -		$                -	$ 102,000.00	FA
	May-02	$ 340,000.00		$            -		$ 119,000.00	$ 221,000.00	$            -		$            -		$                -	$ 340,000.00	FA

b)	Common Stock		$ 178,500.00
c)	Paid-in capital		$ 263,500.00
	in excess of par
d)	Total paid-in		$ 442,000.00
	capital
e)	Total Assets		$ 442,000.00

f)	Journals
	Date	Particulars		Debit	Credit
	Mar-01	Cash A/c		$ 102,000.00
		To Common Stock A/c			$    59,500.00
		To PIC in excess A/c			$    42,500.00
	May-02	Cash A/c		$ 340,000.00
		To Common Stock A/c			$ 119,000.00
		To PIC in excess A/c			$ 221,000.00