E11-2 Reporting Stockholders Equity and Determining Dividend Policy LO 11-2, LO

Question

E11-2 Reporting Stockholders Equity and Determining Dividend Policy LO 11-2, LO 11-3] The following Iinformation applies to the questions displayed below Incentive Corporation was authorized to Issue 12,000 shares of common stock, each with a $2 par value During its first year, the following selected transactions were completed a. Issued 6,200 shares of common stock for cash at $22 per share b. Issued 2.200 shares of common stock for cash at $25 per share References Section Break E11-2 Reporting Stockholders Equity and Determining Dividend Policy [LO 11-2, LO 11-3] value 0.76 points E11-2 Part 1 Required 1. Complete the table below, indicating the account, amount, and direction of the effect for the above transactions. (Enter any decreases to account balances with a minus sign.) Stockholders' Equity Additional Paid-in Capital, Common Stock Assets Liabilities a. Cash Common Stock

Explanation / Answer

1 Assets = Liabilities + Stock holders Equity Cash Common stock Additional paid in capital a Issue of 6200 shares of common stock at $22 $        1,36,400 Issue of 6200 shares $        12,400 Issue of 6200 shares $             1,24,000 b Issue of 2200shares of common stock at $25 $            55,000 Issue of 2200 shares $          4,400 Issue of 2200 shares $                50,600 Total $        1,91,400 Total $        16,800 Total $             1,74,600 Journal Entry work sheet Transaction General Journal Debit($) Credit($) a Cash A/c                                                    Dr. 136400         To Common Stock 12400          To Additional Paid in capital 124000 (Issuence of 6200 shares of common stock with par value $2 for a price of $ 22 per share) INCENTIVE CORPORATION Balance Sheet (partial) at December 31st Stockholder's Equity Contributed Capital $ Common stock at par value                16,800 Additional paid in capital            1,74,600 Total Contributed Capital            1,91,400 Preffered stock                         -   Total Share holders Equity            1,91,400 4 Maximum Amount of cash Dividends when Incentive Corporation has $32000 in Bank Account Maximum Amount of Cash Dividends $ 3.81 per share

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