If the corporation when formed sets a par value for its shares low and issue common stock for a price above par, what is this amount above par called? Can this amount be treated as a gain, income, or profit for the corporation? Please give the reason for your answer. Assume one year later (2019) the company KY Jeweller’s Ltd has been formed and the owners are desirous of companying several financial transactions and possible outcomes to assist in guiding their decision-making process. They have asked each student from your accounting course to prepare the company’s journal entries and statement of owner’s equity based on the following information which is grouped according to your fist name initial. The company’s charter authorizes 1,000,000 shares of common stock and 100,000 shares of preferred stock and the following are the transactions for consideration:KY Jewelers purchased a piece of land from the original owner. In payment for the land, KY Jewelers issues ___ () shares of common stock with $1.00 par value. The land has been appraised at a market value of ____ (refer to the table below380,000$1,500,000The company sold ___refer to the table below) shares of common stock with $1 par value. 150,000 Issued ___ (please refer to table below) shares of $___ (please refer to table below) par value preferred stock. Shares were issued at par.23,000$16Earned net income of $___ (please refer to table below and $940,000Dividend declared and paid - $0.15 per share on common stock Dividend declared and paid - $5 per share on preferred stock Using the information above and as guided:Prepare the Journal entries and closing entries for the above transaction Prepare the owner’s equity section of the balance sheet based on the info above.

Common stock: These are the shares issued by a company to an outsider. These shares entitle a share…

Answered: f the corporation when formed sets a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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If the corporation when formed sets a par value for its shares low and issue common stock for a price above par, what is this amount above par called? Can this amount be treated as a gain, income, or profit for the corporation? Please give the reason for your answer.

Assume one year later (2019) the company KY Jeweller’s Ltd has been formed and the owners are desirous of companying several financial transactions and possible outcomes to assist in guiding their decision-making process. They have asked each student from your accounting course to prepare the company’s journal entries and statement of owner’s equity based on the following information which is grouped according to your fist name initial. The company’s charter authorizes 1,000,000 shares of common stock and 100,000 shares of preferred stock and the following are the transactions for consideration:
KY Jewelers purchased a piece of land from the original owner. In payment for the land, KY Jewelers issues ___ () shares of common stock with $1.00 par value.
The land has been appraised at a market value of ____ (refer to the table below

380,000

$1,500,000

The company sold ___refer to the table below) shares of common stock with $1 par value.

	150,000

Issued ___ (please refer to table below) shares of $___ (please refer to table below) par value preferred stock. Shares were issued at par.

23,000

$16

Earned net income of $___ (please refer to table below and

$940,000

Dividend declared and paid - $0.15 per share on common stock

Dividend declared and paid - $5 per share on preferred stock

Using the information above and as guided:

Prepare the Journal entries and closing entries for the above transaction

Prepare the owner’s equity section of the balance sheet based on the info above.

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