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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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Pharoah Company has accumulated the following budget data for the year 2020. 1. Sales: 31,410 units, unit selling price $89. 2.
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Answer:

<u>Computation of cost of goods sold for 2020</u>

Direct materials(1 pound× $5 )                                  $5

Direct labor(3 hours × $12)                                      $36

manufacturing overhead ($8 × 3 hours)                $24

Total unit cost                                                          $65

<u>Budgeted multiple-step income statement for 2020</u>

Sales ( 31,410 units × $89)                            2,795,490

Less Cost of Sales (31,410 units × $65)      (2,041,650)

Gross Profit                                                      753,840

Less Operating Expenses :

Selling and administrative expenses:           (170,000)

Operating Income                                           583,840

Less Non - Operating Expenses

Interest expense                                             (30,000)

Income before income taxes                         553,840

Income tax (553,840×30%)                            (166,152)

Income After income taxes                            387,688

Explanation:

Cost of Sales = all manufacturing costs

Multi step - Income Statement separates income generated from Primary Activities of the Company (Operating Income) with Income generated from Secondary Activities of the Company (Non-Operating Income)

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On January 1, 2018, the Moody Company entered into a transaction for 100% of the outstanding common stock of Osorio Company. To
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$800

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Ayala Architects incorporated as licensed architects on April 1, 2017. During the first month of the operation of the business,
ArbitrLikvidat [17]

Answer: (1) journal Total Dr $27,282, Cr $27,282 (2) cash Account Dr: Total $21,823, Cr Balance c /d $19,613 Total $21,823, salary payable Total Dr $381, Cr $381,Account receivable Account Dr :Total $1,929 Cr Total $1,929, salary expense Account Dr Total $ 1,524 Cr: $1,524, common stock Total Dr : $18,270 Cr: Total $18,270, Supplies Account Total Dr : $1,320, Cr $1,320, Account Payable Total Dr :$1,320, Cr :Total $1,320, service revenue Total Dr : $4,771, Total Cr : $4,771, unearned revenue Total Dr :$712, Total Cr :$711, (3) Trial Balance Total Dr $24,767, Total Cr : $24,767

Explanation:

(1) The journal entry for the transaction will be

Apr 1 Dr : Cash $18,270, Cr : common stock $18,270

Apr1 Dr: salary payable$381,Cr: cash $381

Apr 2 No entry required

Apr 3 Dr : supplies $1,320, Cr : Account payable $1,320

Apr 10 Dr Account Receivable $1,929, Cr : service revenue $1,929

Apr 11 Dr cash$ 711,Cr: unearned revenue$ 711

Apr 20 Dr: Cash $2,842, Cr : service revenue $2,842

Apr 30 Dr : $ Account Payable $305 Cr : Cash $305

(2) The T Account will be

Cash Account

Dr common stock $18,270, unearned revenue $711, service revenue $2,842

Cr : salary payable $381, salary expense $1,524, Account payable $305,Bal c/d $19,613 Total Dr $21,823, Cr : $21,823

Salary payable Account

Dr : cash $381,Cr: Balance c/d $381 Total Dr $381,Cr :$381

Account Receivable Account

Dr: service revenue $1,929, Cr: Balance c/d $1,929 Total Dr $1,929, Cr $1,929

Salary expense Account

Dr: salary expense $1,524, Cr Balance c/d $1,524, Total Dr $1,524,Cr $1,524

Common Stock

Dr : Balance c /d $18,270, Cr :Cash $18,270 Total Dr $18,270, Cr $18,270

Supplies Account

Dr: Account payable $1,320, Cr Balance c /d $1,320, Total Dr $1,320, Cr $1,320

Account Payable

Dr: Cash $305,Balance c/d $1,015, Cr supplies $1,320, Total Dr $1,320, Cr $1,320

Service Revenue Account

Dr Balance c /d $4,771 Cr : Account Receivable $1,929, cash $2,842, Total Dr $4,771, Cr $4,771

Unearned Revenue Account

Balance c/d $711, Cr cash $711, Total Dr $711,Cr $711

(3) The trial balance as on 30/04/2017

Dr: Cash $19,613, salary payable $381, supplies $1,320, Account Receivable $1,929, salary expense $1,524 Total $24,767

Cr : Common Stock $18,270, Account Payable $1,015, service revenue $4,771, unearned revenue $711 Total $24,767

6 0
3 years ago
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