Question

Sarasota Corporation was organized on January 1, 2020. It is authorized to issue 14,500 shares of 8%, $100 par value preferred stock, and 533,000 shares of no-par common stock with a stated value of $3 per share. The following stock transactions were completed during the first year. Jan. 10 Issued 78,000 shares of common stock for cash at $6 per share. Mar. 1 Issued 4,750 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 $87,000. The fair value of the land was $87,000. May 1 Issued 76,500 shares of common stock for cash at $4.25 per share. Aug. 1 Issued 11,000 shares of common stock to attorneys in payment of their bill of $42,000 for services performed in helping the company organize. Sept. 1 Issued 11,500 shares of common stock for cash at $5 per share. Nov. 1 Issued 1,500 shares of preferred stock for cash at $108 per share.

Journalize the transactions

Post to the stockholders’ equity accounts.

Prepare the paid-in capital section of stockholders’ equity at December 31, 2020

Answer 1

Here's the adjusting journal entries:

Adjusting Journal Entries of Sarasota Corporation
Date	Account Details	Debit	Credit
10-Jan	Dr. Cash A/c	468,000
	Cr. Common stock-no par value		468,000
	(Being share allotted for 78000 shares issued @ $6 per share)
1-Mar	Dr. Cash a/c	498,750
	Cr. Preferred Stock-Par Value		475,000
	Cr. Additional Paid in capital-Preferred Stock		23,750
	(Being share allotted for 4750 preferred stock issued @ $105 per share)
1-Apr	Dr. Land a/c	87,000
	Cr. Common stock-no par value		87,000
	(Being share allotted for 24000 common stock issued for land of $87,000)
1-May	Dr. Cash a/c	325,125
	Cr. Common stock-no par value		325,125
	(Being share allotted for 76500 common stock issued @ $4.25 per share)
1-Aug	Dr. Attorney Fee	42,000
	Cr. A/P		42,000
	(Being Attorney fee accounted)
1-Aug	Dr. A/P	42,000
	Cr. Common stock-no par value		42,000
	(Being share allotted for 11000 common stock issued to Attorney for bill of $ 42000)
1-Sep	Dr. Cash a/c	57,500
	Cr. Common stock-no par value		57,500
	(Being share allotted for 11500 shares issued @ $5 per share)
1-Nov	Dr. Cash a/c	162,000
	Cr. Preferred Stock-Par Value		150,000
	Cr. Additional Paid in capital-Preferred Stock		12,000
	(Being share allotted for 1500 preferred stock issued @ $108 per share)

After posting above entries, here's the stockholder's equity schedule:

Stockholder's Equity schedule as at December 31, 2020 of Sarasota Corporation
	Description	No. of Shares	Total
Authorised Capital
	8% preferred stock at par Value @ $ 100 per share	14500	1,450,000
	Common stock at No-Par value @ $3 per share	533000	1,599,000
	Total	547500	3,049,000
Issued Capital
	8% preferred stock at par Value	6250	625,000
	Common stock at No-Par value	201000	979,625
	Additional Paid-in capital
	8% preferred stock at par Value	6250	35,750
	Common stock at No-Par value	201000	-
	Total Issued capital + Additional paid-in capital	207250	1,640,375