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3 years ago

Journalizing issuance of stock—at par and at a premium

Business

1 answer:

suter [353]3 years ago

4 0

Answer:

Cash 27000 Dr

Common Stock 13500 Cr

Paid in capital in excess of par-Common stock 13500 Cr

Cash 135000 Dr

Preferred Stock 135000 Cr

Explanation:

When we issue stock at premium, we always record the amount received from such issuance of stock at full. So, the cash account will be debited for 4500 * 6 = 27000

However, we record the common stock issued at par value and the remaining is credited under the reserve account which is Paid in capital in excess of par.

Thus the common stock will be credited by its par value of 4500 * 3 = 13500 and the remaining 4500 * 3 will be credited to the Paid in Capital account.

The par value of the preferred stock is 4500 * 30 = 135000

Thus the preferred stock is issued at par and we simply debit the cash received from the issue and credit the preferred stock.

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For each of the following errors, considered individually, indicate whether the error would cause the adjusted trial balance tot

Mice21 [21]

Answer:

a) The debit and credit side of the unadjusted trial balance would be increased by $ 5200.

b) The debit side would remain unchanged. No effect will be seen in the adjusted trial balance.

Explanation:

Effect of adjustments on adjusted Trial Balance.

This first entry would increase the wages expense and increase the liability account in the adjusted trial balance. Both debit and credit side would be increased by an equal amount.

b) This would decrease the Supplies account and increase the supplies expense in the unadjusted account. As both are on the debit side there would be no effect in the debit total.

Sr No Account Debit Credit

Original Entries

a. Wages Expense 5200

Accounts Payable 5200

b. Supplies Expense 1125

Supplies Account 1125

Correct Entries

a. Wages Expense 5200

Accrued Wages Account Payable 5200

b. Supplies Expense 1125

Supplies Account 1125

Difference:

a) We see that the first entry which was original passed the debit side is correct but the credit side would have been of accrued wages instead of accounts payable . This is to raise the amount by which wages are still outstanding by an amount 5200 at the end of the month.

This would decrease the accounts payable increase the wages payable . If the adjustment is not made it the salaries payable is understated .

b)This adjusting entry is correct.

5 0

3 years ago

Michael's, Inc., just paid $2.20 to its shareholders as the annual dividend. Simultaneously, the company announced that future d

Whitepunk [10]

Answer:

The maximum price that should be paid for one share of the company today is $54.895

Explanation:

The price of a stock that pays a dividend that grows at a constant rate forever can be calculated using the constant growth model of Dividend discount model (DDM) approach. The DDM values a stock based on the present value of the expected future dividends. The formula for price today under this model is,

P0 = D1 / r - g

Where,

D1 is the expected dividend for the next period or D0 * (1+g)

r is the required rate of return

g is the growth rate in dividends

SO, the maximum that should be paid for this stock today is:

P0 = 2.2 * (1 + 0.048) / (0.09 - 0.048)

P0 = $54.895 rounded off to $54.90

5 0

3 years ago

What is the best answer choice

Scrat [10]

The answer to that would be B.

3 0

3 years ago

The strength of bargaining power forces depends on the availability of substitutes and ________ compared to the size of supplier

KatRina [158]

Thank you for posting your question here at brainly. I hope the answer will help you. Feel free to ask more questions.

The strength of bargaining power forces depends on the availability of substitutes and the relative size of the firm compared to the size of suppliers or customers.

3 0

3 years ago

Abardeen Corporation borrowed $90,000 from the bank on October 1, 2018. The note had an 8 percent annual rate of interest and ma

TiliK225 [7]

Answer:

Interest paid in cash in 2018 = $0

Interest recognized on the Income statement = $1,800

Liabilities recognized = $90,000

Amount paid for Principal and interest = $93,600

Interest reported on 2019 Income statement = 1800

Explanation:

Interest paid in cash in 2018 is zero because interest and principal were paid in cash on the maturity date.

Interest recognized in 2018 = 90000*0.08*3/12 = $1800

liabilities are recognized at original amount because the interest is not capitalized and no payment made thus far.

Amount paid on maturity date is 93,600 ( 90000 principal, 3600 interest)

interest reported is for three months jan - march

7 0

3 years ago