Questions: 1. Record the transactions in the general journal. 2. Prepare the sto

Question

Questions:
1. Record the transactions in the general journal.
2. Prepare the stockholder's equity section of D-Cell's balance sheet at October 31, 2018. Assume D-Cell's net income for the month was $87,000.

D-Cell Wireless needed additional capital to expand, so the business incorporated. The charter from the state of Georgia authorizes D-Cell to issue 110,000 shares of 6%, $50 par value cumulative preferred stock and 100,000 shares of $2 par value common stock. During the first month, D-Cell completed the following transactions:

Oct. 2 - Issued 25,000 shares of common stock for a building with a market value of $110,000
Oct. 6 - Issued 800 shares of preferred stock for $110 per share.
Oct. 9 - Issued 18,000 shares of common stock for cash of $72,000
Oct. 10 - Declared a $21,000 cash dividend for stockholders of record on
Oct. 20. Use separate dividends payable account for preferred and common stock.
Oct. 25 - Paid the cash dividend

Explanation / Answer

Solution 1:

Solution 2:

Journal Entries - D-Cell Wireless Date Particulars Debit Credit 2-Oct Building Dr $110,000.00       To Common Stock (25000*$2) $50,000.00       To Paid in capital in excess of par - common stock $60,000.00 (To record issue of shares for purchase of building) 6-Oct Cash Dr (800*$110) $88,000.00       To Preferred Stock (800*$50) $40,000.00       To Paid in capital in excess of par - preferred stock (800*$60) $48,000.00 (To record issue of preferred stock) 9-Oct Cash Dr $72,000.00       To Common Stock (18000*$2) $36,000.00       To Paid in capital in excess of par - common stock (18000*$2) $36,000.00 (To record issue of common stock) 10-Oct Dividends Dr $21,000.00       To Dividend Payable - Preferred Stock ($40,000*6%) $2,400.00       To Dividend Payable - Common Stock $18,600.00 (To record dividend declared) 25-Oct Dividend Payable - Preferred stock Dr $2,400.00 Dividend Payable - Common stock Dr $18,600.00       To Cash $21,000.00 (To record payment of dividend)

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