Exercise 11-2 Exercise 11-2 Aloue Corp., a publicly traded company, had 2,400 pr

Question

Exercise 11-2

Exercise 11-2

Aloue Corp., a publicly traded company, had 2,400 preferred shares issued with a balance of $55,200 and 147,000 common shares issued with a balance of $735,000 at the beginning of the year. The following share transactions occurred during the year: June 12 Issued 47,700 common shares for $6 per share. July 11 Issued 1,100 preferred shares for $25 per share. Oct. 1 Issued 9,900 common shares in exchange for land. The common shares were trading for $7 per share on that date. The fair value of the land was estimated to be $73,800. Nov. 15 Issued 26,200 preferred shares for $29 per share.

Explanation / Answer

a)

Par Value of Common stock = 735000/147000 = 5

Par Value of preferred stock = 55200/2400 = 23

June 12:

Cash Dr 286200 (47700*6)

Common Stock Cr 238500 (47700*5)

Paid in Excess of capital Cr 47700 (47700*1)

July 11:

Cash Dr 27500 (1100*25)

Preferred Stock Cr 25300 (1100*23)

Paid in Excess of capital Cr 2200 (1100*2)

Oct 1:

Land Dr 69300

Common Stock Cr 49500 (9900*5)

Paid in excess of Capital Cr 19800 (9900*2)

Nov 15:

Cash Dr 759800 (26200*29)

Preferred Stock Cr 602600 (26200*23)

Paid in Excess of capital Cr 157200 (26200*6)

b)

Number of shares

Balance in accounts

2400+1100+26200 = 29700

55200+25300+602600 = 683100

2.Common shares

147000+47700+9900 = 204600

735000+238500+49500 = 1023000

Number of shares

Balance in accounts

1. Preferred shares

2400+1100+26200 = 29700

55200+25300+602600 = 683100

2.Common shares

147000+47700+9900 = 204600

735000+238500+49500 = 1023000

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