Explanation Common stock: These are the ordinary shares that a corporation issues to the investors in order to raise funds. In return, the investors receive a share of profit from the profits earned by the corporation in the form of dividend. Issue of common stock for non-cash assets or services: Corporations often issue common stock for the services received from attorneys or consultants as compensation, or for the purchase of non-cash assets such as land, buildings, or equipment. Case A: Journalize the two transactions in the books of Company W as follows: Date Accounts title and explanation Debit ($) Credit ($) Cash 950,000 Common Stock ( 12 , 000 × $ 35 ) 420,000 Paid-in Capital in excess of Par-Common stock ( $ 950 , 000 − $ 420 , 000 ) 530,000 (To record the issuance of common stock) Building 560,000 Equipment 390,000 Cash 950,000 (To record the purchase of plant assets) Description: For transaction 1: Cash is an asset and has increased, so debit cash for $950,000. Common Stock is the component of Stockholders’ equity and increased it, so credit it for $420,000. Paid-in Capital in excess of Par-Common stock is the component of stockholders’ equity and increased it, so credit it for $530,000

Financial Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (12th Edition)

12th Edition

ISBN: 9780134833156

Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.

Publisher: PEARSON

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Chapter 10, Problem 10.6S

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To record: The transactions of both cases and compare the balances of all accounts, and identify whether the balances are same or different.

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Chapter 10, Problem 10.5S

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Financial Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (12th Edition)

Ch. 10 - The two main categories of stockholders equity are...Ch. 10 - Prob. 2QC Ch. 10 - Stockholders of a corporation directly elect the...Ch. 10 - The par value of a share of common stock a. is...Ch. 10 - Prob. 5QC Ch. 10 - If a corporation issues 1,000 shares of 1 par...Ch. 10 - Prob. 7QC Ch. 10 - Sandusky Corporation purchased 3,000 shares of its...Ch. 10 - Graves Corporation issued 50,000 shares of 1 par...Ch. 10 - Prob. 10QC

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To record: The transactions of both cases and compare the balances of all accounts, and identify whether the balances are same or different.

Solution Summary: The author compares the balances of all accounts and determines whether the transactions are same or different.

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To record: The transactions of both cases and compare the balances of all accounts, and identify whether the balances are same or different.

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Chapter 10 Solutions