Recording and reporting common and preferred stock transactions Eastport Inc. wa

Question

Recording and reporting common and preferred stock transactions Eastport Inc. was organized on June 5, 2016. It was authorized to issue 300,000 shares of $10 par common stock and 60,000 shares of 6 percent cumulative class A preferred stock. The class A stock had a stated value of $40 per share. The following stock transactions pertain to Eastport Inc.: Issued 20,000 shares of common stock for $14 per share. Issued 10,000 shares of the class A preferred stock for $48 per share. Issued 50,000 shares of common stock for $16 per share. Required Prepare general journal entries for these transactions.

Explanation / Answer

1.Common stock =20,000 *10 ( par value ) = $200,000

Paid in capital in excess of par value =20,000 * 4 = 80,000

2.

Preferred stock =10,000 *40 ( par value ) = $400,000

Paid in capital in excess of par value =10,000 * 8 = $80,000

3.Common stock =50,000 *10 ( par value ) = $500,000

Paid in capital in excess of par value =50,000 * 6 = $300,000

event Dr/Cr Account Amount Amount 1. Dr Cash 280,000 Cr Common stock 200,000 Cr Paid in capital in excess of par 80,000 2. Dr Cash 480,000 Cr Preferred stock 400,000 Cr Paid in capital in excess of par 80,000 3. Dr Cash 800,000 Cr Common stock 500,000 Cr Paid in capital in excess of par 300,000

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