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aleksklad [387]
3 years ago
14

Recording the Sale of Common and Preferred Stock Donahue Corporation is authorized by its charter from the State of Illinois to

issue 2,000 shares of 7% preferred stock with a par value of $30 per share and 125,000 shares of common stock with a par value of $0.01 per share. On January 1, 2019, Donahue issues 1,300 shares of preferred stock at $35 per share and 84,000 shares of common stock at $12.50 per share. Prepare the journal entry to record the issuance of the stock.
Business
1 answer:
vekshin13 years ago
6 0

Answer:

Cash $5,937,500

  To Common stock (125,000 shares × $0.01) $1,250

  To Additional paid in capital in excess of par value - Common stock  (125,000 shares × $12.49) $1,561,250

  To Preferred stock (125,000 shares × $30) $3,750,000

  To Additional paid in capital in excess of par value - Preferred stock (125,000 shares × $5) $625,000

(Being the issuance of the common stock and the preferred stock is recorded)

Explanation:

The journal entry is shown below:

Cash $5,937,500

  To Common stock (125,000 shares × $0.01) $1,250

  To Additional paid in capital in excess of par value - Common stock  (125,000 shares × $12.49) $1,561,250

  To Preferred stock (125,000 shares × $30) $3,750,000

  To Additional paid in capital in excess of par value - Preferred stock (125,000 shares × $5) $625,000

(Being the issuance of the common stock and the preferred stock is recorded)

For recording this we debited the cash as it increased the assets and the equity is also credited so the preferred stock and the common stock could be credited along with the additional paid in capital in excess of par

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3 years ago
The company shipped merchandise valued at $100,000 F.O.B. destination on December 28, Year 3, and recorded the sale and relief o
kondor19780726 [428]

Answer:

The company must not make any adjustment entries in year x3 since the FOB means "Free on board" and at the moment the buyer delivers the goods at the port of shipment, at that time the risks of loss or damage of merchandise are transferred to the buyer from the seller

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8 0
3 years ago
Joan is a manager with Steel Works, Inc. Joan would love to beat the budget this year. She believes that revenues for the coming
vredina [299]

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6 0
2 years ago
The outstanding capital stock of Novak Corporation consists of 1,800 shares of $100 par value, 7% preferred, and 5,100 shares of
Alborosie

Solution :

                                                                            Preferred            Common

Non cumulative and non Participative                    12,600               67,400

Cumulative and non participative                            37800                42200

Cumulative and participative                                   47876                32124

                             

                            <u>    Current Stock Out Standing    </u>

Common stock at the rate 50                             5100 shares         255000

Preferred stock 7% at the rate 100                    1800 shares          180000

         

           <u>  Cumulative the annual dividend on the preferred stock  </u>

Preferred stock dividend                                   (180000 x 7%)       12600

Dividend Arrears to preferred stock                   (12600 x 2)            25200

                        <u>   Non cumulative and non participative     </u>

                                                  Preferred                 Common        Total

Current year                               12600                                            12600

Arrears                                        0                                                    0

Common stock                                                            67400            67400

Total dividend                             12600                       67400            80000

                       <u>  Cumulative and non participative  </u>

                                                  Preferred                 Common        Total

Current year                               12600                                            12600

Arrears                                        25200                                            25200

Common stock                                                            42200            42200

Total dividend                             37800                       42200            80000

                          <u>  Cumulative and participative</u>

                                                  Preferred                 Common        Total

Current year                               12600                                            12600

Arrears                                        25200                                            25200

Common stock (255000 x 7%)                                   17850            17850

Balance dividend pro data          10076                      14274            24350

Total dividend                             47876                       32124            80000

Working notes :

Amount for the participation    = 80000-(12600+25200+17850)   = 24350

Rate of participation = $\frac{24350}{(255000+180000)} $              = 5.5977%

Participating dividend:

Preferred stock = 18000 x 5.5977%   = 10076

Common stock = 255000 x 5.5977%  = 14274

Total participating dividend                  = 24350

7 0
3 years ago
Hirons Air uses two measures of activity, flights and passengers, in the cost formulas in its budgets and performance reports. T
Tatiana [17]

Answer:

$ 10,867 F

Explanation:

Actual results$305,100

Flexible budget [$56,840+ ($2,874× 89) + ($13 ×257)]

$56,840+$255,786+$3,34= $315,967

Spending variance $ 10,867

($305,100-$315,967)

The spending variance for plane operating costs in November would be closest to $ 10,867 because the actual expense is less than the flexible budget, which makes the variance favorable (F)

8 0
3 years ago
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