King Corporation began operations in January of the current year. The charter authorized the following stock:
Preferred stock: 10 percent, $11 par value, 41,700 shares authorized
Common stock: $6 par value, 85,800 shares authorized
During the current year, the following transactions occurred in the order given:
a. Issued 22,200 shares of common stock for $10 cash per share.
b. Sold 9,000 shares of the preferred stock at $21 cash per share.
c. Sold 2,700 shares of the preferred stock at $21 cash per share and 3,400 shares of common stock at $11 cash per share.
Required:
Provide the journal entries required to record each of the transactions in (a) through (c).
Answer
a.
Cash: (22,200 shares × $10) = $222,000
Common stock: (22,200 shares × $6) = $133,200
Additional paid-in capital, common stock (+SE) (22,200 × $4) = $88,800
b.
Cash: (9,000 shares × $21) = $189,000
Preferred stock: (9,000 shares × $11) = $99,000
c.
Cash: (2,700 shares × $21) + (3,400 shares × $11) = $94,100
Preferred stock: (2,700 shares × $11) = $29,700
Common stock: (3,400 shares × $6) = $20,400
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