Palo Verde Company was incorporated on January 1, 2013, with the following autho

Question

Palo Verde Company was incorporated on January 1, 2013, with the following authorized capitalization:

25,000 shares of common stock, stated value $6 per share

8,000 shares of 8% cumulative preferred stock, par value $20 per share

Make entries required for each of the following transactions:

(a) Issued 14,000 shares of common stock for a total of $518,000 and 5,000 shares of preferred stock at $25 per share

(b) Subscriptions were received for 3,000 shares of common stock at a price of $41. A 25% down payment is received.

(c) Collected the remaining amount owed on the stock subscriptions and issued the stock.

(d) Sold the remaining authorized share of common stock at $53 per share.

Explanation / Answer

a.(i) cash 518000 Common stock 84000 Paid in capital excess of stated value-common 434000 (ii) cash 125000 Preferred stock 100000   Paid in capital excess of par-preferred 25000 b. Cash 30750 Common stock subscription receivable 92250 Common stock subscribed 18000 Paid in capital excess of stated value-common 105000 c.(i) cash 92250 Common stock subscription receivable 92250 (ii) common stock subscribed 18000 Common stock 18000 d. Cash 424000 Common stock 48000 Paid in capital excess of stated value-common 376000 Remaining8000 shates are issued

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