Stock Issuance Pittston had the following transactions during 2017: Required: Id
ID: 2600890 • Letter: S
Question
Stock Issuance
Pittston had the following transactions during 2017:
Required:
Identify and analyze the effect of each transaction.
1. Issued 2,700 shares of $10 par common stock for cash at $17 per share.
Activity: Financing
Accounts: Cash Increase, Common Stock Increase, Additional Paid-in Capital - Common Increase
Statement(s): Balance Sheet only
How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.
Balance Sheet Inco me Statement
2. Issued 1,000 shares of preferred stock to acquire land. The preferred stock has a par value of $5 per share. The land has been appraised at $5,000.
Activity: Financing and Investing
Accounts: Land Increase, Preferred Stock Increase, Additional Paid-in Capital - Preferred Increase
Statement(s): Balance Sheet only
How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.
3. Issued 5,700 shares of $10 par common stock as payment to a company that provided advertising for the company. The stock was selling on the stock exchange at $12 per share at the time of issuance.
Activity: Financing and accounting
Accounts: Common Stock Increase, Additional Paid-in Capital - Common Increase, Advertising Expense Increase
Statement(s)Balance Sheet and Income Statement
How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.
Explanation / Answer
explanation
debit
credit
1-
cash
45900
common stock
27000
additional paid in capital-common stock
18900
shareholders equity
Assets
=
liabilities
+
common stock
+ additional paid in capital
+ revenue
- expenses
net income
1-
cash
=
N/A
+
common stock
additional paid in capital-common stock
N/A
N/A
N/A
45900
=
0
+
27000
18900
0
0
0
explanation
debit
credit
2-
land
5000
preferred stock
5000
shareholders equity
Assets
=
liabilities
+
common stock /preferred stock
+ additional paid in capital
+ revenue
- expenses
net income
land
=
N/A
+
preferred stock
N/A
N/A
N/A
N/A
5000
0
5000
0
0
0
0
explanation
debit
credit
3-
advertising expense
68400
common stock
57000
additional paid in capital-common stock
11400
shareholders equity
Assets
=
liabilities
+
common stock /preferred stock
+ additional paid in capital
+ revenue
- expenses
net income
N/A
=
N/A
+
common stock
additional paid in capital-common stock
N/A
advertising expense
N/A
0
0
57000
11400
0
-68400
-68400
explanation
debit
credit
1-
cash
45900
common stock
27000
additional paid in capital-common stock
18900
shareholders equity
Assets
=
liabilities
+
common stock
+ additional paid in capital
+ revenue
- expenses
net income
1-
cash
=
N/A
+
common stock
additional paid in capital-common stock
N/A
N/A
N/A
45900
=
0
+
27000
18900
0
0
0
explanation
debit
credit
2-
land
5000
preferred stock
5000
shareholders equity
Assets
=
liabilities
+
common stock /preferred stock
+ additional paid in capital
+ revenue
- expenses
net income
land
=
N/A
+
preferred stock
N/A
N/A
N/A
N/A
5000
0
5000
0
0
0
0
explanation
debit
credit
3-
advertising expense
68400
common stock
57000
additional paid in capital-common stock
11400
shareholders equity
Assets
=
liabilities
+
common stock /preferred stock
+ additional paid in capital
+ revenue
- expenses
net income
N/A
=
N/A
+
common stock
additional paid in capital-common stock
N/A
advertising expense
N/A
0
0
57000
11400
0
-68400
-68400
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