On February 12, Quality Carpet Inc., a carpet wholesaler, issued for cash 729,00

Question

On February 12, Quality Carpet Inc., a carpet wholesaler, issued for cash 729,000 shares of no-par common stock (with a stated value of $1.40) at $3.70, and on August 3, it issued for cash 22,500 shares of preferred stock, $50 par at $61.

Required:

A. Journalize the entries for February 12 and August 3, assuming that the common stock is to be credited with the stated value. Refer to the Chart of Accounts for exact wording of account titles. B. What is the total amount invested (total paid-in capital) by all stockholders as of August 3?

Explanation / Answer

a) JOURNAL ENTRY :

b. What is the total amount invested (total paid-in capital) by all stockholders as of aug 3

DATE ACCOUNTS & EXPLANATION DEBIT CREDIT Feb 12 Cash a/c 2697300     Common stock a/c 1020600     Paid in capital in excess of stated value-common stock 1676700 (To record issue of common stock) Aug 3 Cash a/c 1372500     Preferred stock 1125000     Paid in capital in excess of stated value-Preferred stock 247500 (To record issue of preferred stock)

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