Stockholder\'s Equity December 2013 Paid in capital: Class A common stock, votin
ID: 2521696 • Letter: S
Question
Stockholder's Equity December 2013 Paid in capital: Class A common stock, voting, $5 par value, $10,000,000 authorized and issued $2,000,000 shares Additional paid-in capital-Class A common stock Class B common stock, nonvoting, no par value, 21,000,000o 165,000,000 196,000,000 authorized and issued 30,000,000 Retained earnings Total shareholder's equity Required: a. Journalize the issuance of the Class A common stock and show a brief narration to support the entries made. (1.5 Marks) b. the issuance of the Class B common stock and show a brief narration to support the entries made. (1 Mark) c. Compute and show the workings for the company's total paid-in capital. (3 Marks) d. Compute and showing the workings for the average issue price of each share for the company's Class B common stock. (1.5 Marks) e. Identity and explain the two basic sources of a corporate's equity. (3 Marks)Explanation / Answer
a) Debit Credit Debit Cash $31m Credit Common Stock-Class A $10m Credit Additional paid in capital - ClassA CS $21m (being Class A common shares issued at $5 per shares) b) Debit Cash 165m Credit Common Stock-Class B $165m (being Class B common shares issue at no par value) c) Common Stock: Class A issued 2m shares at par $5 $10m Class b issued 30m shares with no par 165m Total par common stock issue 175m Add: Additional Paid in capital - Class ACS $21m Total paid in capital $196m d) Average issue price of Class B CS = $165m / 30m shares = $5.5 per Class B Common share e) The two basic sources of a corporate's equity are: 1) Public offering: The common shares are offered to the general public through the issue of Company's prospectus. 2) Private placement : The company can place the common shares to a private financer for a defined period.