a. Explanation Preferred stock : The stock that provides a fixed amount of return (dividend) to its stockholder before paying dividends to common stockholders is referred as preferred stock. 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. Par value : It refers to the value of a stock that is stated by the corporation’s charter. It is also known as face value of a stock. Treasury Stock : It refers to the shares that are reacquired by the corporation that are already issued to the stockholders, but reacquisition does not signify retirement. Record the issuance of common stock. Date Account Title and Explanation Debit Credit Cash ( 25 , 000 × $ 15 ) 375,000 Common Stock ( 25 , 000 × $ 5 par value ) 125,000 Paid-in Capital in Excess of Par value-Common stock ( $375,000 − $ 125 , 000 ) 250,000 (To record issuance of 25,000 shares of $5 par value common stock at $15 per share) Table (1) Description: Cash is an asset account. The amount is increased, because cash is received upon stock issued. Therefore, debit Cash account with $375,000. Common Stock is a stockholders’ equity account and the amount is increased due to issuance of common stock. Therefore, credit Common Stock account with $125,000. Paid-in Capital in Excess of Par Value - Common stock is a stockholders’ equity account and the amount is increased due to increase in capital. Therefore, credit Paid-in Capital in Excess of Par Value - Common stock account with $250,000. Record the issuance of preferred stock b. To determine Prepare journal entries to record the sale of 2,000 shares of treasury stock at $25 per share. c. To determine Prepare journal entries to record the sale of remaining 1,000 shares of treasury stock at $18 per share.

1st Edition

ISBN: 9781618531612

Author: Wallace, Nelson, Christensen, Ferris

Publisher: Cambridge

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Question

Chapter 11, Problem 4AE

To determine

Prepare journal entries to record the share issuances and purchase of the common shares.

To determine

Prepare journal entries to record the sale of 2,000 shares of treasury stock at $25 per share.

To determine

Prepare journal entries to record the sale of remaining 1,000 shares of treasury stock at $18 per share.

Expert Solution & Answer

Chapter 11 Solutions

FINANCIAL ACCT.F/UNDERGRADS-W/ACCESS

Ch. 11 - Prob. 1SSQ Ch. 11 - Prob. 2SSQ Ch. 11 - Prob. 3SSQ Ch. 11 - Prob. 4SSQ Ch. 11 - Prob. 5SSQ Ch. 11 - Prob. 6SSQ Ch. 11 - Prob. 7SSQ Ch. 11 - Prob. 8SSQ Ch. 11 - Prob. 9SSQ Ch. 11 - Prob. 10SSQ

Ch. 11 - Prob. 1Q Ch. 11 - Prob. 2Q Ch. 11 - Prob. 3Q Ch. 11 - Prob. 4Q Ch. 11 - Prob. 5Q Ch. 11 - Prob. 6Q Ch. 11 - Prob. 7Q Ch. 11 - Prob. 8Q Ch. 11 - Prob. 9Q Ch. 11 - Prob. 10Q Ch. 11 - Prob. 11Q Ch. 11 - Prob. 12Q Ch. 11 - Prob. 13Q Ch. 11 - Prob. 14Q Ch. 11 - Prob. 15Q Ch. 11 - Prob. 16Q Ch. 11 - Prob. 17Q Ch. 11 - Prob. 18Q Ch. 11 - Prob. 19Q Ch. 11 - Prob. 20Q Ch. 11 - Prob. 1SE Ch. 11 - Prob. 2SE Ch. 11 - Prob. 3SE Ch. 11 - Prob. 4SE Ch. 11 - Prob. 5SE Ch. 11 - Prob. 6SE Ch. 11 - Prob. 7SE Ch. 11 - Prob. 8SE Ch. 11 - Prob. 9SE Ch. 11 - Prob. 10SE Ch. 11 - Prob. 11SE Ch. 11 - Prob. 1AE Ch. 11 - Prob. 2AE Ch. 11 - Prob. 3AE Ch. 11 - Prob. 4AE Ch. 11 - Prob. 5AE Ch. 11 - Prob. 6AE Ch. 11 - Prob. 7AE Ch. 11 - Prob. 8AE Ch. 11 - Prob. 9AE Ch. 11 - Prob. 10AE Ch. 11 - Prob. 11AE Ch. 11 - Prob. 12AE Ch. 11 - Prob. 13AE Ch. 11 - Prob. 14AE Ch. 11 - Prob. 15AE Ch. 11 - Prob. 1BE Ch. 11 - Prob. 2BE Ch. 11 - Prob. 3BE Ch. 11 - Prob. 4BE Ch. 11 - Prob. 5BE Ch. 11 - Prob. 6BE Ch. 11 - Prob. 7BE Ch. 11 - Prob. 8BE Ch. 11 - Prob. 9BE Ch. 11 - Prob. 10BE Ch. 11 - Prob. 11BE Ch. 11 - Prob. 12BE Ch. 11 - Prob. 13BE Ch. 11 - Prob. 14BE Ch. 11 - Prob. 15BE Ch. 11 - Prob. 1AP Ch. 11 - Prob. 2AP Ch. 11 - Prob. 3AP Ch. 11 - Prob. 4AP Ch. 11 - Prob. 5AP Ch. 11 - Prob. 6AP Ch. 11 - Prob. 7AP Ch. 11 - Prob. 8AP Ch. 11 - Prob. 9AP Ch. 11 - Prob. 10AP Ch. 11 - Prob. 11AP Ch. 11 - Prob. 1BP Ch. 11 - Prob. 2BP Ch. 11 - Prob. 3BP Ch. 11 - Prob. 4BP Ch. 11 - Prob. 5BP Ch. 11 - Prob. 6BP Ch. 11 - Prob. 7BP Ch. 11 - Prob. 8BP Ch. 11 - Prob. 9BP Ch. 11 - Prob. 10BP Ch. 11 - Prob. 11BP Ch. 11 - Prob. 11SP Ch. 11 - Prob. 1EYK Ch. 11 - Prob. 2EYK Ch. 11 - Prob. 3EYK Ch. 11 - Prob. 4EYK Ch. 11 - Prob. 5EYK Ch. 11 - Prob. 6EYK Ch. 11 - Prob. 7EYK Ch. 11 - Prob. 10EYK Ch. 11 - Prob. 11EYK

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