4) On October 15, 2007, Krystle Corporation was established and in its charter,
ID: 2513639 • Letter: 4
Question
4) On October 15, 2007, Krystle Corporation was established and in its charter, the corporation was authorized to sell 500,000 shares of Si par value common stock and 500,000 shares of S5 par value 6% cumulative preferred stock During 2007, the following transactions occurred: (10 points) a. Issued 50,000 shares of common stock at $7 per share b. Issued 35,000 shares of preferred stock at $20 per share c Issued 200,000 shares of common stock at $9 per share Required: 1. 2. Prepare the accounting equation entries for the transactions above. Prepare the stockholder equity section of the balance sheet.Explanation / Answer
Journal Entries Date Account Title and explanation Debit Credit Cash (50,000 shares X $ 7) $ 3,50,000 A) To Shares Capital $ 50,000 To Addittional paid in Capital - Common stock $ 3,00,000 (To Record the issue of share capital) Cash (35,000 shares X $ 20) $ 7,00,000 B) To Preferred Shares Capital $ 1,75,000 To Addittional paid in Capital - Common stock $ 5,25,000 (To Record the issue of Preferred share capital) Cash (200,000 shares X $ 20) $ 18,00,000 C) To Shares Capital $ 2,00,000 To Addittional paid in Capital - Common stock $ 16,00,000 (To Record the issue of share capital) STOCKHOLDER EQUITY SECTION Amount Issued Share Capital 250,000 Share Capital of Par value of $ 1 $ 2,50,000.0 35,000 , 6% Preferred stock , $ 5 of Par Value $ 2,10,000.0 Addittional Paid in Capital : Addittional Paid in Capital of common stock $ 19,00,000.0 Addittional Paid in Capital of Preferred stock $ 5,25,000.0
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