Question

Sage Corporation’s charter authorized issuance of 100,000 shares of $10 par value common stock and 53,400 shares of $50 preferred stock. The following transactions involving the issuance of shares of stock were completed. Each transaction is independent of the others.
1. Issued a $9,500, 9% bond payable at par and gave as a bonus one share of preferred stock, which at that time was selling for $103 a share.
2. Issued 480 shares of common stock for equipment. The equipment had been appraised at $7,100; the seller’s book value was $6,700. The most recent market price of the common stock is $15 a share.
3. Issued 358 shares of common and 90 shares of preferred for a lump sum amounting to $10,200. The common had been selling at $13 and the preferred at $60.
4. Issued 220 shares of common and 51 shares of preferred for equipment. The common had a fair value of $15 per share; the equipment has a fair value of $6,000.
Record the transactions listed above in journal entry form.

Answer 1

Answer:

Cash                   9500   debit

Discount on BP      103 debit

Bonds payable                            9500 credit

Preferred stock                                50 credit

Additional paid-in preferred Stock  63 credit

Equipment               7,100 debit

            Common Stock     4,800 credit

            additional paid-in  2,300 credit

Cash 10,054 debit

  Common stok             3,580 credit

  Additional piad-in CS  1,074 credit

  Preferred Stock          4,500 credit

  Additiona paid-in PS     900 credit

Equipment         6,000 debit

  Common stok             2,200      credit

  Additional piad-in CS    625.32 credit

  Preferred Stock          2,550      credit

  Additiona paid-in PS      724.68 credit

Explanation:

common stock face value 480 x 10 = 4,800

equipment market value                     7,100

additional paid-in                                 2,300

Common stock issuance

358 x 10                     3,580

358 x 13                    4,654

additional paid in CS  1,074

Preferred stock issuance

90   x 50                    4,500

90   x 60                   5,400

additional paid-in PS   900

Total cash proceds: 4,654 + 5,400 = 10,054

Second issuance for equipment(#4)

220 x    10  =  2,200  common shares = 2,200 /4,750 = 0.4632

51    x   50  =   2,550 preferred shares = 2,550/4,750 = 0.5368

Total face value of issuesd shares  4,750

Fair value of the equipment             6,000

additional paid in of                          1,350

from which:

common stock 1,350 x 0.4632  = 625.32

preferred stock 1,350 x .5368   = 724.68