a. The journalizing of the issuance of common stock to Kay and Lauder is as follows:
Debit Patent $100,000
Credit Common Stock $100,000
- Issuance of 100,000 shares at $1 each.
b. The journalizing of the issuance of stock to the outsiders under both plans is as follows:
Plan 1:
Debit Cash $150,000
Credit 6% Preferred stock $150,000
- Issuance of 1,500 shares at $100 par.
Plan 2:
Group 2:
Debit Cash $100,000
Credit Preferred stock, 1,000 shares at $5, $5,000
Credit Additional Paid-in Shares: Preferred $95,000
- Issuance of 1,000 shares at $5 each for $100,000.
Debit Cash $70,000
Credit Common Stock $70,000
- Issuance of 70,000 shares at $1
c. The Stockholders' Equity Section of the Kay and Lauder Corporation is as follows:
<u>Stockholders Equity</u>:
Plan 1:
6% Preferred stock, 1,500 shares at $100, $150,000
Common stock $100,000
Plan 2:
Preferred stock, 1,000 shares at $5, $5,000
Additional Paid-in Shares: Preferred $95,000
<h3>Data and Calculations:</h3>
Value of Patent = $100,000
Authorized preferred stock = 5,000 shares
Authorized common stock = 500,000 shares at $1 par value
Plan 1:
Group 1:
6% Preferred stock, 1,500 shares at $100 par = $150,000
Plan 2:
Group 2:
Preferred stock, 1,000 shares at $5 = $5,000
Additional Paid-in Shares: Preferred = $95,000 ($100,000 - $5,000)
Common Stock, 70,000 shares at $1 = $70,000
Voting shares = 50,000 (1,000 x 50)
Net income $180,000
Plan 1: Dividends:
Preferred dividend $9,000
Common stock 21,000
Total dividends ($30,000)
Retained earnings $150,000
Learn more about the issuance of shares to preferred and common stockholders at brainly.com/question/17134082
