Q21E_1 - Horngren'S Financial And Managerial Accounting

Question

Journalizing issuance of stock

Steller Systems completed the following stock issuance transactions:

May 19 Issued 1,700 shares of \(3 par value common stock for cash of \)10.50 per share.

Jun. 3 Issued 300 shares of \(9, no-par preferred stock for \)15,000 cash.

11 Received equipment with a market value of \(68,000 in exchange for 5,000 shares of the \)3 par value common stock.

Requirements

1. Journalize the transactions. Explanations are not required.

Step-by-Step Solution

Answer

Issued 1,700 shares on premium of $7.5, 300 shares for $15,000, and 5,000 shares in exchange of $68,000 equipment on premium of $53,000.

Step 1: Basic Introduction-

Market value is the current price of an asset in the marketplace.   Market value also alludes to the market capitalization of a publicly traded corporation.

Step 2: Journals

Date	Transaction	Debit	Credit
May 19	Cash (1,700 * $10.50)	$17,850
	Common stock (1,700 * $3)		$5,100
	Paid-in capital in excess of par		$12,750
Jun 3	Cash	$15,000
	Preferred stock		$15,000
Jun 11	Equipment	$68,000
	Common stock		$15,000
	Paid-in capital in excess of par		$53,000