Kras, Inc., was organized and authorized to issue 50,000 shares of $100 par valu
ID: 1768583 • Letter: K
Question
Kras, Inc., was organized and authorized to issue 50,000 shares of $100 par value, 9 percent [referred stock and 50,000 a shares of no-par, $5 stated value common stock on July 1, 2011. Stock-related transactions for Kras are as follow:
July 1 Issued 10,000 shares of common stock at $11 per share.
1 Issued 500 shares of common stock at $11 per share for services rendered in connection with the organization of the company.
2 Issued 1,000 shares of preferred stock at par value for cash.
10 Issued 2,500 shares of common stock for land on which the asking price was $35000. Market value of the stock was $12. Management wishes to record the land at the market value of the stock
Aug.1 purchased 1,500 shares of its common stock at $13 per share.
10 declared a cash dividend for one month on the outstanding preferred stock and $0.02 per share on common stock outstanding, payable on August 22 to stockholders of record on August 12.
12 Date of record for cash dividends.
22 Paid cash dividends.
Required
1. Record the transaction in Journal form.
2. Prepare the stockholders
Explanation / Answer
July 1 Issued 10,000 shares of common stock at $11 per share.
Dr Cash 110,000
Cr Common Stock 50,000
Cr Paid-in Capital in Excess of Stated Value--Common Stock 60,000
1 Issued 500 shares of common stock at $11 per share for services rendered
in connection with the organization of the company
Dr Organizational Expense 5,500
Cr Common Stock 2,500
Cr Paid-in Capital in Excess of Stated Value--Common Stock 3,000
2 Issued 1,000 shares of preferred stock at par value for cash.
Dr Cash 100,000
Cr Preferred Stock 100,000
10 Issued 2,500 shares of common stock for land on which the asking price was $35,000.
Market value of the stock was $12. Management wishes to record the land at the market
value of the stock.
Dr Land 30,000
Cr Common Stock 12,500
Cr Paid-in Capital in Excess of Stated Value--Common Stock 17,500
Aug. 2 Purchased 1,500 shares of its common stock at $13 per share.
Dr Treasury Stock 19,500
Cr Cash 19,500
10 Declared a cash dividend for one month on the outstanding preferred stock and $0.02 per
share on common stock outstanding, payable on August 22 to stockholders of record on
August 12.
100,000 x 9% = $9,000 preferred dividends
11,500 x 0.02 = $230 common dividends
Dr Retained Earnings 9,230
Cr Dividends Payable 9,230
12 Date of record for cash dividends.
No entry needed
22 Paid cash dividends.
Dr Dividends Payable 9,230
Cr Cash 9,230
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