Question

On January 22, Jefferson County Rocks Inc., a marble contractor, issued for cash 210,000 shares of $30 par common stock at $34, and on February 27, it issued for cash 15,000 shares of preferred stock, $9 par at $12. Required: a. Journalize the entries for January 22 and February 27. Refer to the Chart of Accounts for exact wording of account titles. b. What is the total amount invested (total paid-in capital) by all stockholders as of February 27

Answer 1

Answer:

Jefferson County Rocks Inc.

a. Journal Entries:

January 22:

Debit Cash Account $7,140,000

Credit Common Stock $6,300,000

Credit Additional Paid-in Capital - Common $840,000

To record the issue of 210,000 shares of $30 par common stock at $34.

February 27:

Debit Cash Account $180,000

Credit Preferred Stock $135,000

Credit Additional Paid-in Capital - Preferred $45,000

To record the issue of 15,000 shares of preferred stock, $9 par at $12.

b. Total amount invested by all stockholders as of February 27:

Common Stock $6,300,000

Additional Paid-in Capital - Common $840,000

Preferred Stock $135,000

Additional Paid-in Capital - Preferred $45,000

Total $7,320,000

Explanation:

a) Shares issued at above par value:  The difference between the par value and issue price is credited to the Additional Paid-in Capital Account.  This allows the Common Stock and the Preferred Stock to be showed at their par values.