Question

On May 23, Stoltz Realty Inc. issued for cash 80,000 shares of no-par common stock (with a stated value of $3) at $12. On July 6, Stoltz Realty Inc. issued at par value 18,000 shares of preferred 1% stock, $50 par for cash. On September 15, Stoltz Realty Inc. issued for cash an additional 50,000 shares of no-par common stock (with a stated value of $3) for $15.Journalize the entries to record the May 23, July 6, and September 15 transactions. Refer to the Chart of Accounts for exact wording of account titles.

Answer 1

Answer:

23rd May

Dr Cash                                                          960,000

Cr Common stock                                        240,000

Cr Paid-in Capital - Common Stock            720,000

( to record the issuance of 80,000 common shares for cash)

6th July

Dr Cash                           900,000

Cr Preferred stock          900,000

( to record the issuance of 18,000 preferred shares for cash)

15th September

Dr Cash                                                   750,000

Cr Common stock                                  150,000

Cr Paid-in capital - Common Stock       600,000

( to record the issuance of 50,000 common shares for cash)

Explanation:

Working notes for each transactions:

* 23rd May:

Cash increases by: Amount of stocks issued * Price at issuance = 80,000 * 12 = $960,000

Common stock account increases by: Amount of stock issued * Stated value = 80,000 * 3 = 240,000

Paid-in capital account increased by: Amount of stock issued * ( Price at issuance - Stated value) = 80,000 * 9 = $720,000

* 6th July:

Cash increases by: Amount of stocks issued * Price at issuance = 18,000 * 50 = $900,000

Preferred stock account increases by: Amount of stock issued * Par value = 18,000 * 50 = $900,000;

As shares are issued at par; no paid-in capital amount recorded.

* 15th September:

Cash increases by: Amount of stocks issued * Price at issuance = 50,000 * 15 = $750,000

Common stock account increases by: Amount of stock issued * Stated value = 50,000 * 3 = 150,000

Paid-in capital account increased by: Amount of stock issued * ( Price at issuance - Stated value) = 50,000 * 12 = $600,000.