Question

On May 15, Helena Carpet Inc., a carpet wholesaler, issued for cash 746,000 shares of no-par common stock (with a stated value of $1.30) at $4.40, and on June 30, it issued for cash 17,500 shares of preferred stock, $50 par at $61.

Required:

	a. Journalize the entries for May 15 and June 30, assuming that the common stock is to be credited with the stated value. Refer to the Chart of Accounts for exact wording of account titles.
	b. What is the total amount invested (total paid-in capital) by all stockholders as of June 30?

Answer 1

a)
	Journal Entries:
	Date	Account titles and Explanation	Debit	Credit
	May 15	Cash	$       32,82,400
		Common Stock		$          9,69,800
		Paid-in capital in excess of Stated Value-Common Stock		$       23,12,600
		(To record issuance of no-par stock with stated value of $ 1.30)
	Working:
		Total Cash received	=	746000*4.40	=	$       32,82,400
		Common Stock	=	746000*1.30	=	9,69,800
		Paid in capital in excess of Stated Value	=	746000*3.10	=	23,12,600
	Date	Account titles and Explanation	Debit	Credit
	June 30	Cash	$       10,67,500
		Preferred Stock		$          8,75,000
		Paid-in capital in excess of Par Value-Preferred Stock		$          1,92,500
	Working:
		Total Cash received	=	17500*61	=	$       10,67,500
		Preferred Stock	=	17500*50	=	$          8,75,000
		Paid in capital in excess of Par Value	=	17500*11	=	$          1,92,500
b)
		Cash received from issuance of common stock on May 15				$       32,82,400
		Cash received from issuance of preferred stock on June 30				$       10,67,500
		Total amount invested by all stockholders as of June 30				$       43,49,900