E15-1 (LO1) Recording the Issuances of Common Stock

During its first year of operations, Collin Raye Corporation had the following transactions
pertaining to its common stock.

No. of
Shares
Date Issued Issued for Amount
Jan. 10 80,000 Cash $ 6.00 per share
To attorneys in payment of a bill for
Mar. 1 5,000 services rendered in helping the 35,000 in total
company to incorporate
Jul. 1 30,000 Cash 8.00 per share
Sept. 1 60,000 Cash 10.00 per share

Instructions:
(a) Prepare the journal entries for these transactions, assuming that the common stock has
a par value of $5 per share.

Debit Credit
Jan. 10 Cash 480,000
Common Stock 400,000
Paid-in Capital in excess of par common stock 80,000
To record the issue of share

Mar. 1 Organizational Expense 35,000

Common stock 25,000
Paid-in Capital in excess of par Common stock 10,000
To record the issue of share.

Jul. 1 Cash 240,000

Common stock 150,000
Paid-in Capital in excess of par Common Stock 90,000
To record the issue of share.

Sept. 1 Cash 600,000

Common stock 300,000
Paid-in Capital in excess of par Common Stock 300,000
To record the issue of share

(b) Prepare the journal entries for these transactions, assuming that the common stock is no
par with a stated value of $3 per share.

Debit Credit
Jan. 10 Cash 480,000
Common stock 240,000
Paid-in Capital in excess of par Common Stock 240,000
 To record the issue of share.

Mar. 1 Organizational Expense 35,000

Common stock 15,000
Paid-in Capital in excess of Stated Value Common Stock 20,000
To record the issue of share.

Jul. 1 Cash 240,000

Common stock 90,000
Paid-in Capital in excess of stated value common stock 150,000
To record the issue of share

Sept. 1 Cash 600,000

Common stock 180,000
Paid-in Capital in excess of stated value -Common stock 420,000
To record the issue of share.
E15-15 (LO3) Dividend Entries
The following data were taken from the balance sheet accounts of Masefield Corporation on
December 31, 2019.

Current assets $ 540,000

Debt investments (trading) 624,000
Common stock (par value $10) 500,000
Paid-in capital in excess of par 150,000
Retained earnings 840,000

Instructions:
Prepare the required journal entries for the following unrelated items:

(a) A stock dividend is declared and distributed

Amount of dividend 5%
Per share market price $ 39.00

Debit Credit
Dec. 31 Retained Earnings 97,500
Common Stock Dividend Distribution 25,000
Paid-in Capital in Excess Par-Common Stock 72,500
To record the issue of dividend

Dec. 31 Common Stock Dividend Distribution 25,000

Common Stock 25,000
To record the declaration of dividend

(b) The par value of the common stock is reduced with a 5-for-1 stock split
New par value per share $ 2.00

No entry, memorandum note to indicate that par value is reduced to $2 and shares outstanding are 250,000
calculates as below:
Number of shares outstanding= Current number of shares X 5-for-1 stocksplit= 50,00X5 = 250,000

(c) A dividend is declared January 5, 2020, and paid January 25, 2020, in bonds held as an
investment.
Book value of bonds $ 100,000
Fair value of bonds $ 135,000

Debit Credit
Jan. 5 Debt Investment 35,000
Unrealized Holding Gain or Loss-Income 35,000
To record the declaration of dividend

Jan. 5 Retained Earnings 135,000

Property Dividends Payable 135,000
To record the declaration of dividend the issue of dividends.

Jan. 25 Property Dividends Payable 135,000

Debt Investments 135,000
To record the dividend paid in bond.
P15-1 (LO1,2,3,4) Equity Transactions and Statement Preparation
On January 5, 2020, Phelps Corporation received a charter granting the right to issue common
and preferred stock as provided below:

Cumulative and nonparticipating preferred stock:

Number of shares authorized 5,000 shares
Par value $ 100 per share
Dividend rate 8%
Common stock:
Number of shares authorized 50,000 shares
Par value $ 10 per share

It then completed these transactions.

Jan. 11 Issued common stock

Number of shares 20,000
Issue price per share $ 16.00
Feb. 1 Issued preferred stock to Sanchez Corp. for assets with the
following values:
Fair value of equipment $ 50,000
Fair value of a factory building $ 160,000
Appraised value of land $ 270,000
Number of shares issued 4,000
Jul. 29 Purchased shares of common stock (use the cost method)
Number of shares purchased 1,800
Purchase price per share $ 17.00
Aug. 10 Sold treasury shares
Number of shares sold 1,800
Selling price per share $ 14.00
Dec. 31 Declared cash dividend on the common stock
Dividend per share $ 0.25
Declared the preferred dividend
Dec. 31 Closed the Income Summary account.
Net income during 2020 $ 175,700

Instructions:
(a) Record the journal entries for the transactions listed above.

Debit Credit
Jan. 11 Cash 320,000
Common Stock 200,000
Paid-in Capital in Excess of Par-common Stock 120,000
To record the issue of stock.

Feb. 1 Equipment 50,000

Building 160,000
Land 270,000
Preferred Stocks 400,000
Paid-in Capital in Excess of Par-preferredStock 80,000
 To record the issue of stock.

Jul. 29 Treasury Stock 30,600

Cash 30,600
To record the issue of shares.

Aug. 10 Cash 25,200

Retained Earnings 5,400
Treasury Stock 30,600
To record the sale of treasury stock

Dec. 31 Retained earnings 37,000

Dividend Payable 37,000
To record the declaration of dividend

Common stock cash dividend 5,000

32,000
Preferred stock cash dividend
Total cash dividend 37,000

Dec. 31 Income Summary 175,700

Retained Earnings 175,700
To record the closing of income summary.

(b) Prepare the stockholders' equity section of Phelps Corporation's balance sheet as of
December 31, 2020.

PHELPS CORPORATION
Stockholders' Equity
December 31, 2020
Capital Stock
Preferred stock-par value $100 per share,
$400,000 Calculation of Retained Earnings
8% cumulative and nonparticipating,5,000 Total amount of retained earnings=
Net Income- Retained Earnings - Dividends payable
Shares authorized,4,000 shares issued and 175,700-5,400-37,000=133,300

outstanding

Common stock –par value $10 per share,

200,000
50,000 shares authorized,
_________
20,000 shares issued and outstanding
600,000
Total capital stock
Additional paid-in-capital

In excess of par-preferred $ 80,000 200,000

________
In excess of par-common 120,000
800,000
Total paid-in capital
Retained Earnings 133,300
Total stockholders’ Equity $933,300
P15-5 (LO2) Treasury Stock—Cost Method
Before Gordon Corporation engages in the treasury stock transactions listed below, its
general ledger reflects, among others, the following account balances and par value.

Paid-in Capital in Excess of Par - Common Stock $ 99,000

Common Stock $ 270,000
Retained Earnings $ 80,000
Par value of common stock $ 30.00 per share

Instructions:
Record the treasury stock transactions (given below) under the cost method of handling
treasury stock; use the FIFO method for purchase-sale purposes.

(a) Purchase of treasury stock

Number of shares 380
Cost per share $ 40.00

Debit Credit
Treasury Stock 15,200
Cash 15,200

(b) Purchase of treasury stock

Number of shares 300
Cost per share $ 45.00

Debit Credit
Treasury Stock 13,500
Cash 13,500

(c) Sale of treasury stock

Number of shares 350
Price per share $ 42.00

Debit Credit
Cash 14,700
Treasury Stock 14,000
Paid-in Capital from Treasury Stock 700

(d) Sale of treasury stock

Number of shares 110
Price per share $ 38.00

Debit Credit
Cash 4,180
Paid-in Capital from Treasury Stock 620
Treasury Stock 4,800