Answer and Explanation:
a. The journal entries are shown below:
1) Cash Dr (16,000 shares × $14) $224,000
To Common stock (16,000 shares × $9) $144,000
To Additional paid in capital - common (16,000 shares × 5) $80,000
(Being the issuance of the common stock is recorded)
2 Cash Dr (15,000 shares × $30) $450,000
To Preferred stock (15,000 shares × $25) $375,000
To Additional paid in capital - preferred (15,000 shares × $5) $75,000
(Being the issuance of the preferred stock is recorded)
3) Cash Dr (52,000 shares × $17) $884,000
To Common stock (52,000 shares × $9) $468,000
To Additional paid in capital - common (52,000 shares × $8) $416,000
(Being the issuance of the common stock is recorded)
We debited the cash to record this journal entries as it raised the assets and credited the common stock and additional paid in capital, as it also raised the equity of the stockholder
b. The preparation of the stockholder equity section of the balance sheet is presented below:
Stockholders' equity section of the balance sheet
Common stock $612,000 ($144,000 + $468,000)
preferred stock $450,000
Additional paid in capital - preferred $75,000
Additional paid in capital - common $496,000 ($80,000 + $416,000)
Total $1,633,000
