Answer:
a) Journal Entry
Jan 10 Debit Bank $300,000 Credit Capital $200,000 Credit Additional Capital paid-in-excess $100,000
Mar 01 Debit Bank $550,000 Credit Preferred Capital $400,000 Credit Capital paid in excess- Preferred $150,000
Apr 01 Debit Land $75,000 Credit Capital $50,000 Credit Capital paid in excess $25,000
May 01 Debit Bank $300,000 Credit Capital $150,000 Credit Capital paid in excess $150,000
Aug 01 Debit Attorney Fees $50,000 Credit Capital $20,000 Credit Capital Paid in excess $30,000
Sep 01 Debit Bank $30,000 Credit Capital $10,000 Credit Capital Paid in excess $20,000
Nov 01 Debit Bank $120,000 Credit Capital - Preferred $80,000 Credit Capital Paid in excess- Preferred $40,000
b) Paid in capital - Common stock = $325,000
- Preferred stock = $190,000
Explanation:
When stock has a par value or stated value then that means its legally recognized capital per issue can only be calculated as follows
shares issued * par value
or shares issued * stated value
then any surplus cash above the par or state value is recognized as capital paid in excess
Paid in capital - Common stock
10 Jan = $100,000
01 Apr = $25,000
01 May = $150,000
01 Aug = $30,000
01 Sep = $20,000
Total = $325,000
Paid in capital - Preferred stock
01 Mar = $150,000
01 Nov = $40,000
Total = $190,000
