Question

On May 10, a company issued for cash 1,500 shares of no-par common stock (with a stated value of $2) at $14, and on May 15, it issued for cash 2,000 shares of $15 par preferred stock at $58.
Journalize the entries for May 10 and 15, assuming that the common stock is to be credited with the stated value.

Answer 1

Answer:

a) May 10th Debit Cash $21,000 Credit Common Stock 3,000 and Paid in Excess capital $18,000

b) May 15th Debit Cash $116,000 Credit Preferred stock $30,000 and Paid in Excess Preferred Stock $86,000

Explanation:

The question is to show the journal entries of the company on May 10th and May 15 respectively

a) what was the cash received on May 10 = 1,500 shares x $14= $21,000

What is the Value of the stock = 1,500 shares x $2 = 3,000

Paid in excess then = 21,000- 3,000 = $18,000

Journal Entry For May 10

Date                  Description                        Debit ($)          Credit 9$)

10th May       Cash                                       21,000

                           Common stock                                             3,000

                          Excess paid in capital                                    18,000

Being the issue of no-par common stock

b) What was the cash received on May 15th = 2,000 shares x $58 = $116,000

What is the value of the preferred stock = 2,000 shares x 15 = $30,000

Paid in excess preferred stock = $116,000- $30,000 = $86,000

Journal Entry For May 15

Date                  Description                        Debit ($)          Credit 9$)

15th May       Cash                                       116,000

                           Preferred stock                                             30,000

                          Excess paid in capital                                    86,000

Being the record of the issue of preferred stock