Question

Duple Company Ltd., reported the following stockholders’ equity on its balance sheet at Dec 31, 2017: Duple Company Ltd. Stockholders’ Equity Dec 31,2017 Paid-in Capital Preferred stock, 10%, ? par, 1,000,000 shares authorized, 100,000 shares issued $ 2,000,000 Common stock, par value $? per share, 10,000,000 shares authorized, 2,000,000 shares issued and outstanding 4,000,000 Paid-in capital in excess of par—common 20,000,000 Total paid-in capital 26,000,000 Retained earnings 10,600,000 Total Stockholders’ equity $36,600,000 Requirements: 1. What is the par value per share of Supper’s preferred stock? (Show Workings) 2. What is the par value per share of Supper’s common stock? (Show Workings) 3. What is the selling per share for the $20,000,000 reported as paid-in capital in excess of par – common? (Show Workings) 4. Prepare two (2) summary journal entries to record issuance of all the Supper Company Ltd stock for cash. Explanations are not required.

Answer 1

(1). Par value per share of Supper’s preferred stock = $20

Explanation;

Value of preferred stock = $2000000

Number of preferred shares issued and outstanding = 100000

Par value of preferred stock ($2000000 / 100000) = $20

(2). Par value per share of Supper’s common stock = $2

Explanation;

Value of common stock = $4000000

Number of common shares issued and outstanding = 2000000

Par value of common stock ($4000000 / 2000000) = $2

(3). Selling price per share of Supper’s common stock = $12

Explanation;

Value of common stock = $4000000

Paid-in capital in excess of par—common = $20000000

Number of common shares issued and outstanding = 2000000

Selling price per share ($4000000 + $20000000 / 2000000) = $12

(4).

Accounts Title	Debit	Credit
Cash	$2000000
Preferred Stock		$2000000
Cash	$24000000
Common stock		$4000000
Paid-in capital in excess of par—common		$20000000