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Elina [12.6K]
3 years ago
15

Flint Corporation issued 700 shares of no-par common stock for $7,800. Prepare Flint’s journal entry if (a) the stock has no sta

ted value, and (b) the stock has a stated value of $2 per share
Business
2 answers:
Masja [62]3 years ago
4 0

Answer:Flint corporation journal $

Date

1. Bank account Dr 7800

Common stock Or. 7800

Narration. Issuance of 700 ordinary stock for $7800 .

2. Bank account Dr 7800

Common stock Cr. 1400

Share premium. 6400

Narration. Issuance of 700 ordinary at $7800 at a premium.

Explanation:

Shares can be issued at par, premium or discount. When it's issued at it's nominal value it's said to be issued at par, when it's issued above it's nominal value it's said to be issued at a premium and when it's issued below par it's said to issued at a discount.

Mrrafil [7]3 years ago
3 0

Answer:

A. Flint’s journal entry if the stock has no stated value

Dr Bank.....................................7,800

Cr     Common Stock...................7,800

To record the issuance of 700 shares of stock.

B. Flint’s journal entry if the stock has a stated value of $2 per share

Dr Bank................................................................................................7,800

Cr     Common Stock..(700 shares @ $2 par per share...................1,400

Cr     Paid-In Capital in Excess of Par Value.......................................6,400

To record the issuance of 700 shares of stock @ $2 par per share.

Explanation:

In scenario a, where there is no stated par value, there is no way to distinguish between share capital and share premium, hence everything is recorded under common stock but in scenario b, with par value stated, the excess amounts have to be recorded separately  as amount received in excess of par value.

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The following items are taken from the financial statements of the Postal Service for the year ending December 31, 2015: Account
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The amount that would be reported for Stockholders' Equity at December 31, 2015 is:

= $130,000.

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a) Trial Balance

December 31, 2015:  

Cash                                         $15,000

Accounts receivable                   11,000

Supplies                                       4,000  

Prepaid insurance (12-month)    6,000

Equipment                               210,000

Accounts payable                                    $ 18,000

Accumulated depreciation – equipment  28,000

Note payable, due 6/30/16                        70,000

Common stock                                           42,000

Retained earnings (1/1/15)                          60,000

Dividends                                   14,000

Service revenue                                        133,000

Advertising expense                 21,000

Depreciation expense              12,000

Insurance expense                    3,000

Rent expense                           17,000

Salaries and wages expense 32,000

Supplies expense                     6,000

Totals                                   $351,000 $351,000

Income Statement for the year ended December 31, 2015

Service revenue                                      $133,000

Advertising expense                 21,000

Depreciation expense              12,000

Insurance expense                    3,000

Rent expense                           17,000

Salaries and wages expense 32,000

Supplies expense                     6,000     $91,000

Net income                                              $42,000

Statement of Retained Earnings

For the year ended December 31, 2015

Retained earnings (1/1/15)                        $60,000

Net income                                                 42,000

Dividends                                                    (14,000)

Retained earnings (December 31, 2015) $88,000

Equity:

Common stock     $42,000

Retained earnings  88,000

Total equity         $130,000

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