Question

Pronghorn Corp. was organized on January 1, 2022. It is authorized to issue 19,800 shares of 7%, $50 par value preferred stock and 462,000 shares of no-par common stock with a stated value of $1 per share. The following stock transactions were completed during the first year. Jan. 10 Issued 71,000 shares of common stock for cash at $5 per share. Mar. 1 Issued 1,220 shares of preferred stock for cash at $56 per share. May 1 Issued 116,000 shares of common stock for cash at $8 per share. Sept. 1 Issued 5,200 shares of common stock for cash at $6 per share. Nov. 1 Issued 3,200 shares of preferred stock for cash at $58 per share.

Journalize the transactions.

Post to the stockholders’ equity accounts.

Prepare the paid-in capital portion of the stockholders’ equity section at December 31, 2022.

Answer 1

Solution:

Requirement A: Journal Entries

Date	Account Titles and Explanation	Debit	Credit
Jan.10,2022	Cash	$         355,000
	Common stock		$           71,000
	Paid-In-Capital in Excess of Par Common Stock		$        284,000
	(Being Common Stock Issued)
Mar.1,2022	Cash	$            68,320
	Preferred Stock		$           61,000
	Paid-In-Capital in Excess of Par Preferred Stock		$             7,320
	(Being Preferred Stock Issued)
May.1,2022	Cash	$         928,000
	Common stock		$        116,000
	Paid-In-Capital in Excess of Par Common Stock		$        812,000
	(Being Common Stock Issued)
Sept.1,2022	Cash	$            31,200
	Common stock		$             5,200
	Paid-In-Capital in Excess of Par Common Stock		$           26,000
	(Being Common Stock Issued)
Nov.1,2022	Cash	$         185,600
	Preferred Stock		$        160,000
	Paid-In-Capital in Excess of Par Preferred Stock		$           25,600
	(Being Preferred Stock Issued)

Requirement B: Equity Accounts

Common Stock Account
	$                    -	Beg Bal	$                    -
	$                    -	Jan.10,2022	$           71,000
	$                    -	May.1,2022	$        116,000
	$                    -	Sept.1,2022	$             5,200
	$                    -	End Bal	$        192,200

Preferred Stock Account
	$                    -	Beg Bal	$                    -
	$                    -	Mar.1,2022	$           61,000
	$                    -	Nov.1,2022	$        160,000
	$                    -	End Bal	$        221,000

Requirement C: Paid In Capital Portion of Balance Sheet

Pronghorn Corp.
Balance Sheet (partial)
For the year ended December 31,2022
Stockholder's equity :
7% Preferred Stock, $50 par,19800 shares authorized, 4,420 shares issued and outstanding		$        221,000
Common Stock, $1 stated value, 462,000 shares authorized, 192,200 shares issued and outstanding		$        192,200
Additional Paid in capital
Paid-in capital in excess of par-preferred stock	$            32,920
Paid-in capital in excess of par-common stock	$      1,122,000
Total Additional Paid in capital		$     1,154,920
Total paid in capital		$     1,568,120