additional information if needed: Tony and Suzie purchased land costing $410,000
ID: 2361025 • Letter: A
Question
additional information if needed:
Tony and Suzie purchased land costing $410,000 for a new camp in January 2014. Now they need money to build the cabins, dining facility, a ropes course, and an outdoor swimming pool. Tony and Suzie first checked with Summit Bank to see if they could borrow another million dollars, but unfortunately the bank turned them down as too risky. Undeterred, they promoted their idea to close friends they had made through the outdoor clinics and TEAM events. They decided to go ahead and sell shares of stock in the company to raise the additional funds for the camp. Great Adventures has two classes of stock authorized: 8%, $10 par preferred, and $1 par value common.
When the company began on July 1, 2012, Tony and Suzie each purchased 14,500 shares of $1 par value common stock at $1 per share. The following transactions affect stockholders
Tony and Suzie purchased land costing $410,000 for a new camp in January 2014. Now they need money to build the cabins, dining facility, a ropes course, and an outdoor swimming pool. Tony and Suzie first checked with Summit Bank to see if they could borrow another million dollars, but unfortunately the bank turned them down as too risky. Undeterred, they promoted their idea to close friends they had made through the outdoor clinics and TEAM events. They decided to go ahead and sell shares of stock in the company to raise the additional funds for the camp. Great Adventures has two classes of stock authorized: 8%, $10 par preferred, and $1 par value common.
Explanation / Answer
July 1, 2012 Cash $14,500
Common Stock $14,500
Sale of 14,500 shares to Tony @ $1
____________________________________________
July 1, 2012 Cash $14,500
Common Stock $14,500
Sale of 14,500 shares to Suzie @ $1
____________________________________________
July 2, 2012 Cash(109,000x$12) $1,308,000
Common Stock $109,000
Paid In Capital in Excess of Par $1,199,000
(109,000 x $11)
Sale of 109,000 shares @ $12 each
____________________________________________________
Sep 10, 2012 Common Stock (11,900 x $1) $11,900
Paid In Capital in Excess of Par $178,500
(11,900 x $15)
Cash (11,900 x $16) $190,400
Repurchase of 11,900 treasury stock @ $16 each
____________________________________________________
Nov. 15, 2012 Cash (4,500 x $17) $76,500
Common Stock (4,500 x $1) $4,500
Paid In Capital in Excess of Par $72,000
(4,500 x $16)
Reissue of treasury stock of 4,500 shares @ $17 each
________________________________________________________
Retained Earnings $130,600
Dvidends Payable $130,600
Declaration of cash dividends to share holders @ $1 each
_________________________________________________________
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