
Concept explainers
(a)
Common stock: Common stock is the cash raised by the company by issuing common or ordinary shares to the stockholders. This is an investment for the shareholders for which they receive the dividends from the issuing company, and have voting rights.
Preferred stock: Preferred stock is the cash raised by the company by issuing
Par value: The corporation charter assigns and allocates the dollar value for its share which is referred to as par value.
Debit and credit rules:
- Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in
stockholders’ equity accounts. - Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.
To journalize: The transactions occurred on January 22, and February 27
(b)
Paid-in capital: This is the total of stock capital contributed by investors, and so, sometimes referred to as contributed capital. It includes preferred stock capital issued, common stock capital issued, and capital issued by the way of sale of
To determine: The total paid in capital as of February 27

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Chapter 12 Solutions
Cengagenowv2, 1 Term Printed Access Card For Warren/jones’ Corporate Financial Accounting, 15th
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