Question

Eastport Inc. was organized on June 5, Year 1. It was authorized to issue 440,000 shares of $10 par common stock and 60,000 shares of 4 percent cumulative class A preferred stock. The class A stock had a stated value of $25 per share. The following stock transactions pertain to Eastport Inc.: Issued 22,000 shares of common stock for $15 per share. Issued 8,000 shares of the class A preferred stock for $30 per share. Issued 48,000 shares of common stock for $18 per share. Required a. Prepare general journal entries for these transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Answer:

Explanation:

The journal entries are shown below:

1. Cash A/c Dr $330,000         (22,000 shares × $15)

    To Common Stock $220,000      (22,000 shares × $10)

    To  Additional Paid-in Capital in excess of par - Common Stock $110,000

 (22,000 shares × $5)

(Being the issuance of stock is recorded and the remaining balance is credited to the additional paid-in capital account)

2. Cash A/c Dr $240,000         (8,000 shares × $30)

    To Preferred Stock $200,000      (8,000 shares × $25)

    To  Additional Paid-in Capital in excess of par - Preferred Stock $40,000

(8,000 shares × $5)

(Being the issuance of stock is recorded and the remaining balance is credited to the additional paid-in capital account)

3. Cash A/c Dr $864,000         (48,000 shares × $18)

    To Common Stock $480,000      (48,000 shares × $10)

    To  Additional Paid-in Capital in excess of par - Common Stock $384,000    (48,000 shares × $8)

(Being the issuance of stock is recorded and the remaining balance is credited to the additional paid-in capital account)