E11-6 Recording and Reporting Stockholders Equity Transactions [LO 11-2, LO 11-4

Question

E11-6 Recording and Reporting Stockholders Equity Transactions [LO 11-2, LO 11-4] Ava School of Learning obtained a charter at the start of the year that authorized 50,000 shares of no-par common stock and 20,000 shares of preferred stock, par value $10. During the year, the following selected transactions occurred: a. Collected $44 cash per share from four individuals and issued 5,400 shares of common stock to each. b. Issued 6,400 shares of common stock to an outside investor at $44 cash per share. c. Issued 8,400 shares of preferred stock at $24 cash per share. Required: 1. Prepare the journal entries indicated for each of these transactions. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet Record the issuance to four individuals of 5,400 shares each of common stock with no par value for a price of $44 per share. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal

Explanation / Answer

1) Accounts And Titles Debit Credit a. Cash ($44 x 5400 shares x 4) $950,400.00            Common Stock $950,400.00 b. Cash ($44 x 6400 shares) $281,600.00            Common Stock $281,600.00 c. Cash ($24 x 8400 shares) $201,600.00            Common Stock ($10 x 8400 shares ) $84,000.00            Additional Paid in Capital - Common (difference) $117,600.00 b) AVA school Balance Sheet (Partial) At December 31 Shareholders' Equity Contributed Capital: Common Stock, no par, 50,000 shares authorized, 21,600 shares issued and outstanding $950,400.00 Preferred Stock, $10 par, 20,000 shares authorized,8,400 shares issued and outstanding $84,000.00 Additional Paid in Capital -Preferred $117,600.00                Total Contributed Capital $1,152,000.00 Retained Earnings $40,000.00 Total Stockholders’ Equity $1,192,000.00

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