Question

Bennis Corporation was organized on January 1, 2014. It is authorized to issue 10,000 shares of 8%, $100 par value preferred stock and 500,000 shares of no-par common stock with a stated value of $1 per share. The following stock transactions were completed during the first year.

Jan 10- Issued 40,000 shares of common stock for cash at $3.60 per share

Mar-1 issued 5,000 shares of preferred stock for cash at $102 per share

May-1 Issued 90,000 shares of common stock for cash at $4 per share

Sept-1 Issued 10,000 shares of common stock for cash at $4.40 per share

Nov-1 issued 4,000 shares of preferred stock for cash at $103 per share.

a) Journalize the transactions

b) Post to the stockholders' equity accounts (Use T-Accounts)

c) Prepare the pain-in capital section of stockholders' equity at December 31, 2014

Answer 1

Requirement a:

Date	Account title and explanation	Debit	Credit
Jan 10	Cash [40,000 x $3.60]	$144,000
	Common stock [40,000 x $1 stated value]		$40,000
	Paid-In capital in excess of stated value - Common		$104,000
	[To record issuance of common stock]
Mar 1	Cash [5,000 x $102]	$510,000
	Preferred stock [5,000 x $100 par]		$500,000
	Paid-In capital in excess of par-Preferred		$10,000
	[To record issuance of common stock]
May 1	Cash [90,000 x $4]	$360,000
	Common stock [90,000 x $1 stated value]		$90,000
	Paid-In capital in excess of stated value - Common		$270,000
	[To record issuance of common stock]
Sept 1	Cash [10,000 x $4.40]	$44,000
	Common stock [10,000 x $1 stated value]		$10,000
	Paid-In capital in excess of stated value - Common		$34,000
	[To record issuance of common stock]
Nov 1	Cash [4,000 x $103]	$412,000
	Preferred stock [4,000 x $100 par]		$400,000
	Paid-In capital in excess of par-Preferred		$12,000
	[To record issuance of common stock]

Requirement b:

Common stock
……….	……….	Jan 10	$40,000
		May 1	$90,000
		Sept 1	$10,000
		Bal.	$140,000
Preferred stock
		Mar 1	$500,000
		Nov 1	$400,000
		Bal.	$900,000
Paid-in capital in excess of stated vaue-Common
		Jan 10	$104,000
		May 1	$270,000
		Sept 1	$34,000
		Bal.	$408,000
Paid-in capital in excess of par - preferred
		Mar 1	$10,000
		Nov 1	$12,000
		Bal.	$22,000

Requirement c:

Balance Sheet (partial)
At December 31,2014
Stockholders' Equity:
Common stock	$140,000
Preferred stock	$900,000
Paid-in capital in excess of stated value-Common	$408,000
Paid-in capital in excess of par-preferred	$22,000
Total paid-in capital	$1,470,000