Mendoza Corporation was organized on January 1, 2017. It is authorized to issue
ID: 2331057 • Letter: M
Question
Mendoza Corporation was organized on January 1, 2017. It is authorized to issue 20,000 shares of 6%, $40 par value preferred stock, and 500,000 shares of no-par common stock with a stated value of $2 per share. The following stock transactions were completed during the fi rst year.
Jan. 10 Issued 100,000 shares of common stock for cash at $3 per share.
Mar. 1 Issued 10,000 shares of preferred stock for cash at $55 per share. Apr. 1 Issued 25,000 shares of common stock for land. The asking price of the land was $90,000. The company’s estimate of fair value of the land was $75,000. May 1 Issued 75,000 shares of common stock for cash at $4 per share.
Aug. 1 Issued 10,000 shares of common stock to attorneys in payment of their bill for $50,000 for services performed in helping the company organize. Sept. 1 Issued 5,000 shares of common stock for cash at $6 per share.
Nov. 1 Issued 2,000 shares of preferred stock for cash at $60 per share.
(a) Journalize the transactions.
(b) Post to the stockholders’ equity accounts. (Use J1 as the posting reference.)
(c) Prepare the paid-in capital section of stockholders’ equity at December 31, 2017.
Explanation / Answer
(a).
Date
Accounts Title & Explnation
Debit
Credit
Jan. 10
Cash (100000 * $3)
$300000
Common Stock
$200000
Paid in capital excess of stated value – Common
Stock
$100000
March 1
Cash (10000 * $55)
$550000
Preferred Stock (10000 * $40)
$400000
Paid in capital excess of par value – Preferred
Stock
$150000
April 1
Land
$75000
Common Stock (25000 * $2)
$50000
Paid in capital excess of stated value – Common
Stock
$25000
May 1
Cash (75000 * $4)
$300000
Common Stock (75000 * $2)
$150000
Paid in capital excess of stated value – Common
Stock
$150000
Aug. 1
Organizational Expense
$50000
Common Stock (10000 * $2)
$20000
Paid in capital excess of stated value – Common
Stock
$30000
Sep. 1
Cash (5000 * $6)
$30000
Common Stock (5000 * $2)
$10000
Paid in capital excess of stated value – Common
stock
$20000
Nov. 1
Cash (2000 * $60)
$120000
Preferred Stock (2000 * $40)
$80000
Paid in capital excess of par value – Preferred
stock
$40000
(b).
Preferred Stock
March 1
$400000
Nov. 1
$80000
Balance
$480000
Common Stock
Jan. 10
$200000
April 1
$50000
May 1
$150000
Aug. 1
$20000
Sep. 1
$10000
Balance
$430000
Paid-in capital in excess of par value – Preferred Stock
March 1
$150000
Nov. 1
$40000
Balance
$190000
Paid-in capital in excess of stated value – Common Stock
Jan. 10
$100000
April 1
$25000
May 1
$150000
Aug. 1
$30000
Sep. 1
$20000
Balance
$325000
(C).
Mendoza Corporation
Partial Balance Sheet
December 31, 2017
Stockholders’ Equity;
Paid in capital
Capital Stock;
6% Preferred Stock, $40 par value, 20000 shares authorized and 12000 shares issued
$480000
Common stock, No par value, $2 stated value, 500000 shares authorized and 215000 shares issued
$430000
Total capital stock
$910000
Additional paid-in capital;
Paid-in capital in excess of par value – Preferred Stock
$190000
Paid-in capital in excess of stated value – Common Stock
$325000
Total additional paid-in capital
$515000
Total paid-in capital
$1425000
Date
Accounts Title & Explnation
Debit
Credit
Jan. 10
Cash (100000 * $3)
$300000
Common Stock
$200000
Paid in capital excess of stated value – Common
Stock
$100000
March 1
Cash (10000 * $55)
$550000
Preferred Stock (10000 * $40)
$400000
Paid in capital excess of par value – Preferred
Stock
$150000
April 1
Land
$75000
Common Stock (25000 * $2)
$50000
Paid in capital excess of stated value – Common
Stock
$25000
May 1
Cash (75000 * $4)
$300000
Common Stock (75000 * $2)
$150000
Paid in capital excess of stated value – Common
Stock
$150000
Aug. 1
Organizational Expense
$50000
Common Stock (10000 * $2)
$20000
Paid in capital excess of stated value – Common
Stock
$30000
Sep. 1
Cash (5000 * $6)
$30000
Common Stock (5000 * $2)
$10000
Paid in capital excess of stated value – Common
stock
$20000
Nov. 1
Cash (2000 * $60)
$120000
Preferred Stock (2000 * $40)
$80000
Paid in capital excess of par value – Preferred
stock
$40000