Answer:
B. The invested amount is $1,410,000
Explanation:
A. The journal entry is shown below:
For February 12:
Cash A/c Dr (1,000,000 shares × $1.20) = $1,200,000
To Common stock (1,000,000 shares × $0.25) = $250,000
To Paid in capital in excess of par $950,000
(Being common stock is issued for cash)
For August 3:
Cash A/c Dr (10,000 shares × $21) = $210,000
To Preference stock (10,000 shares × $15) = $150,000
To Paid in capital in excess of par $60,000
(Being preference stock is issued for cash)
B. The computation of the total amount invested is shown below:
Common stock = $250,000
Add: Preferred stock = $150,000
Add: Additional paid up capital of common stock = $950,000
Add: Additional paid up capital of Preference stock = $60,000
So, the invested amount is $1,410,000
