Ava School of Learning obtained a charter at the start of the year that authoriz

Question

Ava School of Learning obtained a charter at the start of the year that authorized 50,000 shares of no-par common stock and 20,000 shares of preferred stock, par value $10. During the year, the following selected transactions occurred:

1

Record the issuance to four individuals of 4,100 shares each of common stock with no par value for a price of $31 per share.

2

Record the issuance to an outside investor of 5,100 shares of common stock with no par value for a price of $31 per share.

3

Record the issuance of 7,100 shares of preferred stock with a par value $10 for a price of $16 per share.

Ava School of Learning obtained a charter at the start of the year that authorized 50,000 shares of no-par common stock and 20,000 shares of preferred stock, par value $10. During the year, the following selected transactions occurred:

Explanation / Answer

Journal entry :

Date accounts & explanation debit credit Cash a/c (4100*4*31) 508400       Common stock a/c 508400 (To record common stock issue) Cash a/c (5100*31) 158100       Common stock a/c 158100 (To record common stock issue) Cash a/c (7100*16) 113600      Preferred stock a/c (7100*10) 71000      Paid in capital in excess of par value-preferred stock 42600 (To record preferred stock issue)

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