(Learning Objectives 2, 6: Account for issuance of stock; report stockholders’ e
ID: 2461815 • Letter: #
Question
(Learning Objectives 2, 6: Account for issuance of stock; report stockholders’ equity) Pryor Sales, Inc., is authorized to issue 190,000 shares of common stock and 10,000 shares of preferred stock. During its first year, the business completed the following stock issuance transactions: Jul 19 Issued 12,000 shares of $4.00 par common stock for cash of $12.00 per share. Oct 3 Issued 600 shares of $3.00 no-par preferred stock for $62,000 cash. 11 Received inventory valued at $16,000 and equipment with market value of $8,500 for 3,600 shares of the $4.00 par common stock. Requirement 1. Journalize the transactions. Explanations are not required. Prepare the stockholders’ equity section of Pryor Sales’ balance sheet. The ending balance of retained earnings is a deficit of $40,000.
Explanation / Answer
Journal Entries are as follows
Stockholders' Equity Section
Prefered Stock $3 No Par
10000 Shares Authorised 600 Shares issued $62000
Common Stock $4 Par
190000 Shares authorises, 15600 Shares issued $62400
Paid in Capital in Excess of Par-Common
($96000+$10100) $106100
Retained Earnings Deficit ($40000)
Total Stock Holders' Equity $190,500
Date Account Debit Credit Jul-19 Cash $144000 Common Stock $48000 Capital in Excess of Par Value-Common $96000 Oct-3 Cash $62000 Prefered Stock $62000 -11 Inventory $16000 Equipment $8500 Common Stock(3600*$4) $14400 Paid in Capital in Excess of Par-Common $10100Related Questions
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