Question

On January 22, Zentric Corporation issued for cash 342,000 shares of no-par common stock at $20. On February 14, Zentric issued at par value 9,000 shares of preferred 6% stock, $80 par for cash. On August 30, Zentric issued for cash 31,000 shares of preferred 6% stock, $80 par at $85. Journalize the entries to record the January 22, February 14, and August 30 transactions. Refer to the Chart of Accounts for exact wording of account titles.

Answer 1

Answer:

Journal Entries

January 22

Dr. Cash                  $6,840,000  

Cr. Common stock  $6,840,000

February 14

Dr. Cash                  $720,000  

Cr. Preferred stock $720,000

August 30

Dr. Cash                                                                   $2,635,000

Cr. Preferred stock                                                  $2,480,000

Cr. Paid in capital excess of par-Preferred stock $155,000

Explanation:

January 22

Common Stock = Numbers of shares issued x Issue price per share

Common Stock = 342,000 shares x $20

Common Stock = $6,840,000

February 14

Preferred stock = Numbers of preferred shares x Price per preferred share

Preferred stock = 9,000 shares x $80 per share

Preferred stock = $720,000

August 30

Cash Received = Numbers of shares x issuance price = 31,000 x $85 = $2,635,000

Cash Received = Numbers of shares x par value = 31,000 x $80 = $2,480,000

Paid in capital excess of par  = $2,635,000 - $2,480,000 = $155,000