Nilson Company is incorporated at the beginning of this year and engages in a nu

Question

Nilson Company is incorporated at the beginning of this year and engages in a number of transactions. The following journal entries impacted its stockholders' equity during its first year of operations.

a. Cash. 60,000
Common stock, $1 Par Value.. 1,500
Paid-In Capital in Excess of
Par Value, Common Stock... 58,000
b. Organization Expenses.. 20,000
Common stock, $1 Par Value.. 500
Paid-In Capital in Excess of
Par Value, Common Stock... 19,500
c. Cash.. 6,650
Accounts Receivable. 4,000
Building.. 12,500
Notes Payable.. 3,150
Common Stock, $1 Par Value.. 400
Paid-In Capital in Excess of
Par Value, Common Stock.. 19,600
d. Cash. 30,000
Common Stock, $1 Par Value.. 600
Paid-In Capital Excess of
Par Value, Common Stock 29,400
1. Explain the transaction(s) underlying each journal entry (a) through (d). 2. How many shares of common stock are outstanding at year-end? 3. What is the amount of minimum legal capital (based on par value) at year-end? 4. What is the total paid-in capital at year-end? 5. What is the book value per share of the common stock at year-end if total paid-in capital plus retained earnings equals $141,500?

Explanation / Answer

1. a. 1500 shares of common stock were sold for $60,000 b. 500 shares of common stock were issued to pay for 20,000 of organization expenses. c. 400 shares of common stock were issued along with a note payable. For this, Nilson received cash of 6650, accounts receivable of 4000 and a building worth 12,500. d. 600 shares of common stock were sold for $30,000. 2. 1500 + 500 + 400 + 600 = 3000 shares 3. 3000 shares * $1 = $3,000 4. 60,000 + 20,000 + 20,000 + 30,000 = $130,000 5. 141,500/3000 = $47.17 book value per share

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