Auto Bowl Company was organized on January 3, 2014. The firm was authorized to i

Question

Auto Bowl Company was organized on January 3, 2014. The firm was authorized to issue 100,000 shares of $5 par common stock. During 2014, Auto Bowl Company had the following transactions relating to shareholders' equity:

January 5, 2014 - Issued 30,000 shares of common stock at $7 per share.
January 7, 2014 - Issued 20,000 shares of common stock at $8 per share.
Reported a net income of $100,000.
Paid dividends of $50,000.

1. Prepare the two (2) journal entries to record the sale of the shares:

2. What is total paid-in capital at the end of 2014?  

Explanation / Answer

1) Journal Entries :-

2) Total Paid in Capital = $60000 + $60000 = $120000

Date Particulars Debit($) Credit($) Jan. 5, 2014 Cash A/c Dr. (30000*$7) 210000 To Common Stock A/c (30000*$5) 150000 To Paid in Capital A/c (30000*$2) 60000 Jan. 7, 2014 Cash A/c Dr. (20000*$8) 160000 To Common Stock A/c (20000*$5) 100000 To Paid in Capital A/c (20000*$3) 60000

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