Homework SourseInstructions On February 12 Quality Carpet Inc a carpet whol
Instructions
On February 12, Quality Carpet Inc., a carpet wholesaler, issued for cash 1,000,000 shares of no-par common stock (with a stated value of $0.25) at $1.20, and on August 3, it issued for cash 10,000 shares of preferred stock, $15 par at $21.
Required:
| A. | Journalize the entries for February 12 and August 3, assuming that the common stock is to be credited with the stated value. Refer to the Chart of Accounts for exact wording of account titles. |
| B. | What is the total amount invested (total paid-in capital) by all stockholders as of August 3? |
Solution
Journal Entries
A
Date
Particulars
Debit
Credit
12-Feb
Cash/Bank acc (1,000,000 share *$1.20)
$1,200,000
To common stock (1,000,000 share *$0.25)
$250,000
To paid in capital in excess of par (1,000,000 share *(1.2 -0.25)
$950,000
(Common stock issued recorded)
3-Aug
Cash/Bank acc (10,000 share *$21)
$210,000
To Preference stock (10,000 share *$15)
$150,000
To paid in capital in excess of par (10,000 share *($21-$15))
$60,000
(Preference stock issued recorded)
B
Total Paid in capital As on August 3
Common stock
$250,000
Preference stock
$150,000
Additional paid in capital for common stock
$950,000
Additional paid in Preference for common stock
$60,000
Total paid in capital
$1,410,000
| Journal Entries | ||||
| A | Date | Particulars | Debit | Credit |
| 12-Feb | Cash/Bank acc (1,000,000 share *$1.20) | $1,200,000 | ||
| To common stock (1,000,000 share *$0.25) | $250,000 | |||
| To paid in capital in excess of par (1,000,000 share *(1.2 -0.25) | $950,000 | |||
| (Common stock issued recorded) | ||||
| 3-Aug | Cash/Bank acc (10,000 share *$21) | $210,000 | ||
| To Preference stock (10,000 share *$15) | $150,000 | |||
| To paid in capital in excess of par (10,000 share *($21-$15)) | $60,000 | |||
| (Preference stock issued recorded) | ||||
| B | Total Paid in capital As on August 3 | |||
| Common stock | $250,000 | |||
| Preference stock | $150,000 | |||
| Additional paid in capital for common stock | $950,000 | |||
| Additional paid in Preference for common stock | $60,000 | |||
| Total paid in capital | $1,410,000 |
