E11-6 Recording and Reporting Stockholders Equity Transactions [LO 11-2, LO 11-4
ID: 2590701 • Letter: E
Question
E11-6 Recording and Reporting Stockholders Equity Transactions [LO 11-2, LO 11-4] 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: a. Collected $49 cash per share from four individuals and issued 5,900 shares of common stock to each. b. Issued 6,900 shares of common stock to an outside investor at $49 cash per share. c. Issued 8,900 shares of preferred stock at $16 cash per share. Required 1. Prepare the journal entries indicated for each of these transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)Explanation / Answer
AVA School of Learnings General Journal Particular Debit Credit a) Cash=(5900*4*$49) $ 1,156,400.00 To Common Stock $ 1,156,400.00 (Being 5900 shares issued to 4 individuals each@ 49) b) Cash=(6900*$49) $ 338,100.00 To Common Stock $ 338,100.00 (Being 6900 shares issued to outside investors@ 49) c) Cash=(8900*$16) $ 142,400.00 To Preferred Stock=(8900*$10) $ 89,000.00 To Paid in Capital excess of par-Preferred stock(8900*$6) $ 53,400.00 (Being 8900 Preferred stock par value $10 issued for $16) Ava School of Learnings Partial Balance Sheet At December 31st Stockholder's Equity Contributed Capital Authorized 50000 shares no par common stock 30500(5900*4+6900) shares issued and outstanding $ 1,494,500.00 Authorized 20000 shares of preferred stock 8900 shares issued and outstanding $ 89,000.00 Paid in capital excess of par-Preferred stock $ 53,400.00 Total Contributed Capital $ 1,636,900.00 Retained earnings $ 45,000.00 Total Stockholders Equity $ 1,681,900.00
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