Question

Eastport Inc. was organized on June 5, Year 1. It was authorized to issue 390,000 shares of $8 par common stock and 50,000 shares of 4 percent cumulative class A preferred stock. The class A stock had a stated value of $25 per share. The following stock transactions pertain to Eastport Inc.: Issued 24,000 shares of common stock for $13 per share. Issued 15,000 shares of the class A preferred stock for $30 per share. Issued 46,000 shares of common stock for $16 per share. Required

a. Prepare general journal entries for these transactions.

b. Prepare the stockholders’ equity section of the balance sheet immediately after these transactions.

Answer 1

Account Titles and Explanation	Debit	Credit
Cash (24000 x $13)	$    312,000.00
Common stock (24000 x $8)		$ 192,000.00
Paid in excess of Par - Common (24000 x $5)		$ 120,000.00
( Issued 24,000 shares of common stock for $13 per share)
Cash (15000 x $30)	$    450,000.00
Preferred stock (15000 x $25)		$ 375,000.00
Paid in excess of Par -Preferred  (15000 x $5)		$   75,000.00
(ssued 15,000 shares of the class A preferred stock for $30 per share.)
Cash (46000 x $16)	$    736,000.00
Common stock (46000 x $8)		$ 368,000.00
Paid in excess of Par - Common (46000 x $8)		$ 368,000.00
( Issued 46,000 shares of common stock for $16 per share)
b)
Shareholders' Equity
Preferred Stock, $25 stated value, 4% cumulative class A, 50,000 shares authorized, 15,000 shares issued and outstanding	$    375,000.00
Common Stock, $8 par value, 380,000 shares authorized, 70,000 shares issued and outstanding	$    560,000.00
Paid-in capital in excess of stated value, preferred stock	$      75,000.00
Paid-in capital in excess of par, common stock	$    488,000.00
Retained Earnings	0
Total stockholders’ equity	$ 1,498,000.00