Problem 10-67B (Algorithmic) Issuing Common and Preferred Stock Tom Smith, a bio
ID: 2519389 • Letter: P
Question
Problem 10-67B (Algorithmic)
Issuing Common and Preferred Stock
Tom Smith, a biochemistry professor, organized Biointernational, Inc., earlier this year. The firm will manufacture antibiotics using gene splicing technology. Biointernational's charter authorizes the firm to issue 50,000 shares of 10 percent, $60 par preferred stock and 75,000 shares of $12 par common stock. During the year, the firm engaged in the following transactions:
Issued 15,000 common shares to Tom Smith in exchange for $250,000 cash.
Sold 20,000 common shares to a potential customer for $13 per share.
Issued 2,000 shares of preferred stock to a venture capital firm for $65 per share.
Gave 75 shares of common stock to Susie Thomas, a local attorney, in exchange for Susie's work in arranging for the firm's incorporation. Susie usually charges $1,130 for an incorporation.
a. Common Stock Cash (Record sale of common stock) b. (Record sale of common stock) C. (Record sale of preferred stock) (Record sale of common stock)Explanation / Answer
a) Cash 250,000 common stock (15000*12) 180000 paid in capital in excess of par 70,000 b) Cash 260000 common stock 240000 paid in capital in excess of par 20,000 c) Cash 130000 Preferred stock (2000*60) 120000 paid in capital in excess of par 10000 d) organizational expense 1,130 common stock (75*12) 900 paid in capital in excess of par 230
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