Pinson Corporation was organized on January 1, 2010. It is authorized to issue 2
ID: 2375393 • Letter: P
Question
Pinson Corporation was organized on January 1, 2010. It is authorized to issue 20,000 shares of 6%, $50 par value preferred stock and 500,000 shares of no-par common stock with a stated value of $1 per share. The following stock transactions were completed during the first yearJan. 10 Issued 80,000 shares of common stock for cash at $4 per share.
Mar. 1 Issued 12,000 shares of preferred stock for cash at $54 per share.
May 1 Issued 120,000 shares of common stock for cash at $5 per share.
Sept. 1 Issued 5,000 shares of common stock for cash at $6 per share.
Nov. 1 Issued 3,000 shares of preferred stock for cash at $56 per share.
category options are : cash, common stock , paid in capital in excess of stated value- common stock, preferred stock, treasury stock, paid in capital in excess of par value- preferred stock
Explanation / Answer
Every time you issue stock you increase Cash and need to increase two Equity Accounts based on par and excess of par. Jan. 10 Issued 80,000 shares of common stock for cash at $4 per share: Amount of cash received per share: $4 * 80,000 shares = $320,000 Stated Cost (similar to par, given in problem): $1 * 80,000 shares = $80,000 Excess: $4-1 = $3 * 80,000 shares = $240,000 Journal: Cash $320,000 Common Stock $80,000 Paid In Capital in Excess of Stated Value- Common Stock $240,000 Mar. 1 Issued 12,000 shares of preferred stock for cash at $54 per share. Amount of cash received per share: $54 * 12,000 shares = $648,000 Par Value (given in problem): $50 * 12,000 shares = $600,000 Excess: $54-50 = $4 * 12,000 shares = $48,000 Journal: Cash $648,000 Preferred Stock $600,000 Paid In Capital in Excess of Stated Value- Preferred Stock $48,000 It is the same for the rest of them, except the shares #'s and cash received and excess change. Par is always the same, depending on Preferred or Common Stock.