P10-65A. (Learning Objectives 2,6: Account for stock issuance; report stockholde

Question

P10-65A. (Learning Objectives 2,6: Account for stock issuance; report stockholders' equity) The partners who own Whitewater Rafts Co. wished to avoid the unlimited personal liability of the partnership form of business, so they incorporated as Whitewater Rafts, Inc. The charter from the state of Colorado authorizes the corporation to issue 150,000 shares of $8 par common stock. In its first month, Whitewater Rafts completed the following transactions: Issued 800 shares of common stock to the promoter for assistance with issuance of the common stock. The promotional fee was $15,600. Debit Organization Expense. Issued 10,000 shares of common stock to Blake Anderson and 25,000 shares to John Jefferson in return for cash equal to the stock's market value of $23 per share. The two men were partners in Whitewater Rafts Co. Issued 1,400 shares of common stock for $24 cash per share. Requirements 1. Record the transactions in the journal. 2. Prepare the stockholders' equity section of the Whitewater Rafts, Inc., balance sheet at March 31, 2015. The ending balance of Retained Earnings is $83,000.

Explanation / Answer

Issue of 1400 Share at 24 per share

journal entries date   particular debit credit Jan-01 cash A/c                                        Dr                     1,200,000.00      To Common Stock     1,200,000.00 (issue of 150000 share of $8 par common share) Mar-06 Good will A/c                             Dr                             6,400.00 (800 share@8 per share) Organisation Expense A/c     Dr                           15,600.00 (promotional fee)         To common Stock           22,000.00 Mar-09 cash A/c                                        Dr                        805,000.00 (issue of 35000 share @23 to its partners         To Blake Anderson           80,000.00         To John jafferson         200,000.00         To additional paid in capital         525,000.00 (issue of 35000 share @23 to its partners) Mar-26 cash A/c                                        Dr                           33,600.00         To common Stock           11,200.00         To additional paid in capital           22,400.00

Issue of 1400 Share at 24 per share

Balance sheet as on 31/march 2015 Liabilities Amount Assets Amount Share capital Athorised Share capital      1,200,000.00 150000 share of 8 per share Issued Share Capital issued to promoter (800 share @8)               6,400.00 Blake Anderson            80,000.00 John jafferson          200,000.00 issue capital            11,200.00 Retained earnings            83,000.00          380,600.00

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