Question

Terms and Definitions

A corporation is a legal entity, distinct and separate from the individuals who create and operate it. As a legal entity, it can sell shares of ownership, called stock. In many cases, a dollar amount may be assigned to each share of stock; this is called the ????? of the shares. When only one class of stock is issued, it is called ?????? . A corporation may issue more than one class of stock. In this case, the second class of stock will have various preference rights, such as a preference to dividends, and is called ?????? .

Understanding the Business Transaction

Each share of common stock has equal rights. The maximum number of shares of stock that a corporation can issue (as stated in its charter) is the number of shares ???? . The number of shares previously sold to shareholders is the number of shares ?????, while the number of shares remaining in the hands of stockholders is the number of shares ???? .

Stock is often issued by a corporation at a price other than its par value. If stock is issued (sold) for a price that is above its par value, the stock has been sold at a ??? . If stock is issued (sold) for a price that is less than its par value, the stock has been sold at a ????? .

On January 6, Dee-Light Corporation issued for cash 17,400 shares of $2 par value common stock at $31 per share. On May 10, Dee-Light issued at par 4,900 shares of preferred 4% stock, $20 par for cash. On June 22, Dee-Light issued for cash 25,650 shares of 4%, $25 par value preferred stock at $28 per share. Determine the amount of cash that Dee-Light will receive from each of these stock issuances.

Issue Date		Cash Received
January 6		$ ?
May 10		$ ?
June 22		$ ?

Recording in the Accounting System

Journalize the entry to record the January 6 issuance of common stock. If an amount box does not require an entry, leave it blank or enter "0".

Jan. 6

Journalize the entry to record the May 10 issuance of preferred stock.

May 10

Journalize the entry to record the June 22 issuance of preferred stock. If an amount box does not require an entry, leave it blank or enter "0".

June 22

Answer 1