Question

Exercise 11-9A Recording and reporting common and preferred stock transactions LO 11-4

Eastport Inc. was organized on June 5, Year 1. It was authorized to issue 320,000 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 $30 per share. The following stock transactions pertain to Eastport Inc.:

1. Issued 20,000 shares of common stock for $13 per share.
2. Issued 10,000 shares of the class A preferred stock for $35 per share.
3. Issued 52,000 shares of common stock for $16 per share.

Required
a. Prepare general journal entries for these transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

• Issued 20,000 shares of common stock for $13 per share.
• Issued 10,000 shares of the class A preferred stock for $35 per share.
• Issued 52,000 shares of common stock for $16 per share.

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

	Stockholders’ equity Total stockholders’ equity $0

Answer 1

Answer:

(a)-Journal Entries to record these transactions

Date	Accounts Tittles	Debit ($)	Credit ($)
1	Cash A/c [20000 x $13]	260000
	To Common Stock A/c [20000 x $8]		160000
	To Paid-in capital in Exc. Of Par – Common Stock A/c [20000 x $5]		100000
2	Cash A/c [10000x $35]	350000
	To Preferred Stock A/c [10000x $30]		300000
	To Paid-in capital in Exc. Of SV- Preferred Stock A/c [10000x $5]		50000
3	Cash A/c [52000x $16]	832000
	To Common Stock A/c [52000x $8]		416000
	To Paid-in capital in Exc. Of Par – Common Stock A/c [52000x $8]		416000

(b)-Stockholders Equity Section in the Balance Sheet

Stockholders’ Equity
Preferred Stock	$300000
Common Stock [$160000+ 416000]	$576000
Paid-in capital in Exc. Of SV- Preferred Stock	$50000
Paid-in capital in Exc. Of Par – Common Stock [$30,000 + 300,000]	$330,000
Retained Earnings	$0
Total Stockholders’ Equity	$1,256,000

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