Ava School of Learning obtained a charter at the start of 2013 that authorized 50,000 shares of no-par common stock and 20,000 shares of preferred stock, par value $10. During 2013, the following selected transactions occurred:
a. Collected $39 cash per share from four individuals and issued 4,900 shares of common stock to each.
b. Issued 5,900 shares of common stock to an outside investor at $39 cash per share.
c. Issued 7,900 shares of preferred stock at $21 cash per share.
1. Prepare the journal entries indicated for each of these transactions.
2. Prepare the stockholders' equity section of the balance sheet at December 31, 2013. At the end of 2013, the accounts reflected net income of $35,000. No dividends were declared.
Stock with no par-value:
Corporations usually raise their capital account by issuing their stocks. These stocks, most of the time has par value or stated value. But, there'll be instances when a stock has no par value or stated value, if this happens, the entry involved in issuing the stock should only be a debit to an asset account and a credit directly to the stock at issue price.
Answer and Explanation: 1
|Item no,||Account titles||Debit||Credit|
|a||Cash (4,900 * 4 * $39)||764,400|
|b||cash (5,900 * 21)||123,900|
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fromChapter 8 / Lesson 6
Stocks are an investment into the shares or ownership of a company and repay the shareholder dividends throughout the year. Learn more about stocks, investment performance, dividends, the role of the stock exchange, and how to calculate earnings.