On April 1, 10,000 shares of $5 par common stock were issued at $22, and on April 7, 5,000 shares of $50 par preferred stock were issued at $104.
Journalize the entries for April 1 and 7. For a compound transaction, if an amount box does not require an entry, leave it blank or enter "0".
April 1:
Debit Cash $220,000 (10,000 shares * $22 per share)
Credit Common Stock $50,000 (10,000 shares * $5 par value)
Credit Additional Paid-in Capital $170,000 [$220,000 - ($50,000 par value * 10,000 shares)]
April 7:
Debit Cash $520,000 (5,000 shares * $104 per share)
Credit Preferred Stock $250,000 (5,000 shares * $50 par value)
Credit Additional Paid-in Capital $270,000 [$520,000 - ($250,000 par value * 5,000 shares)]
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To journalize the entries for April 1 and 7, we will need to consider the accounts affected and the amounts involved.
April 1:
The issuance of 10,000 shares of $5 par common stock at $22.
The accounts affected are:
1. Common Stock (Increases with the par value of the shares issued)
2. Additional Paid-in Capital (Increases with the excess of the issuance price over the par value)
To calculate the amounts:
1. Common Stock: 10,000 shares x $5 par value = $50,000 (increase in common stock)
2. Additional Paid-in Capital: ($22 - $5) x 10,000 shares = $170,000 (increase in additional paid-in capital)
Therefore, the journal entry for April 1 would be:
Common Stock $50,000
Additional Paid-in Capital $170,000
Cash $220,000
April 7:
The issuance of 5,000 shares of $50 par preferred stock at $104.
The accounts affected are:
1. Preferred Stock (Increases with the par value of the shares issued)
2. Additional Paid-in Capital - Preferred Stock (Increases with the excess of the issuance price over the par value)
To calculate the amounts:
1. Preferred Stock: 5,000 shares x $50 par value = $250,000 (increase in preferred stock)
2. Additional Paid-in Capital - Preferred Stock: ($104 - $50) x 5,000 shares = $270,000 (increase in additional paid-in capital - preferred stock)
Therefore, the journal entry for April 7 would be:
Preferred Stock $250,000
Additional Paid-in Capital - Preferred Stock $270,000
Cash $520,000
Please note that these journal entries assume that the company received the full amount of cash for the shares issued.
To journalize the entries for April 1 and 7, we need to understand the basic structure of a journal entry. A journal entry consists of the date of the transaction, debits and credits, and a brief description of the transaction.
In this case, on April 1, 10,000 shares of $5 par common stock were issued at $22. This means that the company issued 10,000 shares of common stock with a par value of $5 each, at a price of $22 per share.
To record this transaction, we need to debit the Cash account for the total amount received from the issuance of common stock and credit the Common Stock account for the par value of the shares issued. The remaining amount will be recorded as additional paid-in capital.
On April 7, 5,000 shares of $50 par preferred stock were issued at $104. This means that the company issued 5,000 shares of preferred stock with a par value of $50 each, at a price of $104 per share.
To record this transaction, we need to debit the Cash account for the total amount received from the issuance of preferred stock and credit the Preferred Stock account for the par value of the shares issued. The remaining amount will be recorded as additional paid-in capital.
Below are the journal entries for April 1 and 7:
April 1:
Debit: Cash - $220,000 (10,000 shares x $22)
Credit: Common Stock - $50,000 (10,000 shares x $5)
Credit: Additional Paid-in Capital - $170,000 ($220,000 - $50,000)
April 7:
Debit: Cash - $520,000 (5,000 shares x $104)
Credit: Preferred Stock - $250,000 (5,000 shares x $50)
Credit: Additional Paid-in Capital - $270,000 ($520,000 - $250,000)
Please note that the journal entries depend on the specific accounts and accounting policies of the company. It's always recommended to consult with a professional accountant or refer to the company's accounting guidelines for accurate recording of transactions.