the charter from the state of colorado authourizes the corporation to issue 150,
ID: 2448338 • Letter: T
Question
the charter from the state of colorado authourizes the corporation to issue 150,000 shares of $8 per common stock. In its first month, Whitewater Rafts completed the following transaction:
March 6 issued 800 shares of common stock to the promoter for assitance with issuance of the common stock. The promotional fee was $15,600. Debit Organization expense
March 9 Issued 10,000 shares of common stock to Blake Anderson and 25,000 shares to John Jefferson in return for cash equal tothe stock's market value of $23 per share.
March 26 issued 1,400 shares of common stock for $24 cash per share
REQUIREMENTS:
1) record the transactions in the journal
2) Prepare the Stockholders equity section of the balance sheet at March 31, 2015. The ending balaanc eof retained earnings is $83,000.
Explanation / Answer
Solution :
1. Journal Entry :
Date
Particulars
Debit
Credit
Mar 6.
ORGANISATION EXPENSE
15,600
COMMON STOCK(800X8)
6,400
PAID IN CAPITAL IN EXCESS OF PAR
9,200
Mar 9.
CASH
805,000
COMMON STOCK(35000 X 8)
280,000
PAID IN CAPITAL IN EXCESS OF PAR
525,000
Mar 26.
CASH
33,600
COMMON STOCK(1400X 8)
11,200
PAID IN CAPITAL IN EXCESS OF PAR
22,400
2. Stockholders equity as at March 31, 2015
COMMON STOCK, $8 PAR,
150000 SHARES AUTHORISED, 37200 SHARES ISSUED*
297,600
PAID IN CAPITAL IN EXCESS OF PAR**
556,600
RETAINED EARNING
83,000
937,200
*37200 x8
**9200+525000+22400
1. Journal Entry :
Date
Particulars
Debit
Credit
Mar 6.
ORGANISATION EXPENSE
15,600
COMMON STOCK(800X8)
6,400
PAID IN CAPITAL IN EXCESS OF PAR
9,200
Mar 9.
CASH
805,000
COMMON STOCK(35000 X 8)
280,000
PAID IN CAPITAL IN EXCESS OF PAR
525,000
Mar 26.
CASH
33,600
COMMON STOCK(1400X 8)
11,200
PAID IN CAPITAL IN EXCESS OF PAR
22,400
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