Question

D-Mobile Wireless needed additional capital to expand, so the business incorporated. The charter from the state of Georgia authorizes D-Mobile to issue 50,000 shares of 8%, $50 par value cumulative preferred stock and 160,000 shares of $4 par value common stock. During the first month, D-Mobile completed the following transactions:

Oct. 2	Issued 19,000 shares of common stock for a building with a market value of $240,000.
6	Issued 600 shares of preferred stock for $140 per share.
9	Issued 11,000 shares of common stock for cash for $5 per share
10	Declared a $19,000 cash dividend for stockholders of record on Oct. 20. Use a separate Dividends Payable account for preferred and common stock.
25	Paid the cash dividend. Purchased 600 shares of the company’s common stock , paying cash of $6 per share.

Requirements

1. Record the transactions by preparing journal entries in the general journal.

2. Prepare the stockholders’ equity section of T-Mobile's balance sheet at October 31, 2018. Assume T-Mobile's net income for the month was $94,000.

NOTE : Use the Exhibit 13-7 on page 700 of your text book as your model for the                      Stockholders’ section of the balance sheet.

Answer 1

Date	General Journal	Debit	Credit
2-Oct	Building	240000
	Common stock-$4 par value 19000*4		76000
	Paid-in Capital in excess of par- Common 240000-76000		164000
6-Oct	Cash 600*140	84000
	Preferred stock-$50 par Value 600*50		30000
	Paid-in Capital in excess of par- Preferred 600*90		54000
9-Oct	Cash 11000*5	55000
	Common stock-$4 par value 11000*4		44000
	Paid-in Capital in excess of par- Common 11000*1		11000
10-Oct	Retained earnings	19000
	Dividends payable- preferred 30000*8%		2400
	Dividends payable- common		16600
25-Oct	Dividends payable- preferred 30000*8%	2400
	Dividends payable- common	16600
	Cash		19000

Stockholder equity:
Paid in Capital
Preferred Stock-8%, $50 par Value	30,000
Paid in Capital in Excess of Par- Preferred	54,000
Common Stock- $4 Par Value [76000+44000]	120,000
Paid in Capital in Excess of Par- Common 164000+11000	175,000
Total Paid In Capital	379,000
Retained Earning [94000-19000]	75,000
Total Stockholders Equity	454,000