Answer:
Jefferson County Rocks Inc.
a. Journal Entries:
January 22:
Debit Cash Account $7,140,000
Credit Common Stock $6,300,000
Credit Additional Paid-in Capital - Common $840,000
To record the issue of 210,000 shares of $30 par common stock at $34.
February 27:
Debit Cash Account $180,000
Credit Preferred Stock $135,000
Credit Additional Paid-in Capital - Preferred $45,000
To record the issue of 15,000 shares of preferred stock, $9 par at $12.
b. Total amount invested by all stockholders as of February 27:
Common Stock $6,300,000
Additional Paid-in Capital - Common $840,000
Preferred Stock $135,000
Additional Paid-in Capital - Preferred $45,000
Total $7,320,000
Explanation:
a) Shares issued at above par value: The difference between the par value and issue price is credited to the Additional Paid-in Capital Account. This allows the Common Stock and the Preferred Stock to be showed at their par values.
