Two Problem show steps please REMEMBER TO SHOW ALL YOUR WORK FOR PARTIAL CREDIT
ID: 2545343 • Letter: T
Question
Two Problem show steps please
REMEMBER TO SHOW ALL YOUR WORK FOR PARTIAL CREDIT On January 1, Safe-T Enterprises entered into a subscription contract for 1,000 shares of $10 par common stock at a price of $50 per share. The contract required an immediate down payment of $30 per share with the remaining $20 per share due on February 1. The stock will be issued to each subscriber upon full payment . Required: Prepare the journal entries to record the following: a. Receipt of the down payment and signing of the contract on January b. Receipt of the remaining balances on February 1 from subscribers to 1,000 shares, the market price on February 1 is $60Explanation / Answer
1. Journal Entries
Date
Account Title and Explanations
Debit
Credit
Jan 1
Subscription receivable (1,000 * 50)
50,000
Common stock subscribed (1,000 * 10)
10,000
Additional paid in capital in excess of par (1,000*40)
40,000
(to record the common shares subscribed)
Jan 1
Cash
30,000
Subscription receivable (1,000 *30)
30,000
(to record the down payment)
Feb 1
Cash (1,000 * 20)
20,000
Subscription receivable
20,000
(to record the remaining amount received)
Feb 1
Common stock subscribed
10,000
Common stock
10,000
(to record the common stock issued)
2. Journal Entries
Date
Account Title and Explanations
Debit
Credit
Mar 1
Treasury Stock (2,000 *15)
30,000
Cash
30,000
(to record reacquisition of shares)
Apr 1
Cash (1,000 *16)
16,000
Treasury stock (1,000 *15)
15,000
Additional paid in capital– treasury stock (1,000 * (16-15)
1,000
(to record reissue of shares acquired)
May 1
Cash (500 *14)
7,000
Additional paid in capital – treasury stock (500* (15-14))
500
Treasury stock (500*15)
7,500
(to record reissue of shares acquired)
Jun 1
Common stock (500 *5)
2,500
Additional paid in capital in excess of par : Common stock ( 500 * (12-5) )
3,500
Additional Paid in capital- treasury stock (1000 -500)
500
Retained earnings
1,000
Treasury stock (500 *15)
7,500
(to record the retirement of shares acquired and the loss on the retirement)
Note:
Loss on the retirement of shares first adjusted towards the balance in additional paid in capital- treasury stock balance and then balance amount if any remains debited to the retained earnings
Date
Account Title and Explanations
Debit
Credit
Jan 1
Subscription receivable (1,000 * 50)
50,000
Common stock subscribed (1,000 * 10)
10,000
Additional paid in capital in excess of par (1,000*40)
40,000
(to record the common shares subscribed)
Jan 1
Cash
30,000
Subscription receivable (1,000 *30)
30,000
(to record the down payment)
Feb 1
Cash (1,000 * 20)
20,000
Subscription receivable
20,000
(to record the remaining amount received)
Feb 1
Common stock subscribed
10,000
Common stock
10,000
(to record the common stock issued)
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