Effect of issuing common stock on the balance sheet
Newly formed Super Max Corporation has 30,000 shares of $10 par common stock authorized. On March 1, 2011, Super Max issued 5,000 shares of the stock for $20 per share. On May 2 the company issued an additional 6,000 shares for $24 per share. Super Max was not affected by other events during 2011.
Required:
a. Record the transactions in a horizontal statements model like the following one. 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.
Assets = Liab. + | Equity | Rev. - Exp. = Net Inc | Cash Flow |
Cash = | Com. Stk. + PIC in Excess |
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b. Determine the amount Super Max would report for common stock on the December 31, 2011, balance sheet.
c. Determine the amount Super Max 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 Super Max report on the December 31, 2011, balance sheet?
f. Prepare journal entries to record the March 1 and May 2 transactions.
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