In: Accounting
Questions:
1. Record the transactions in the general journal.
2. Prepare the stockholder's equity section of D-Cell's balance
sheet at October 31, 2018. Assume D-Cell's net income for the month
was $87,000.
D-Cell Wireless needed additional capital to expand, so the
business incorporated. The charter from the state of Georgia
authorizes D-Cell to issue 110,000 shares of 6%, $50 par value
cumulative preferred stock and 100,000 shares of $2 par value
common stock. During the first month, D-Cell completed the
following transactions:
Oct. 2 - Issued 25,000 shares of common stock for a building with a
market value of $110,000
Oct. 6 - Issued 800 shares of preferred stock for $110 per
share.
Oct. 9 - Issued 18,000 shares of common stock for cash of
$72,000
Oct. 10 - Declared a $21,000 cash dividend for stockholders of
record on
Oct. 20. Use separate dividends payable account for preferred and
common stock.
Oct. 25 - Paid the cash dividend
Solution 1:
Journal Entries - D-Cell Wireless | |||
Date | Particulars | Debit | Credit |
2-Oct | Building Dr | $110,000.00 | |
To Common Stock (25000*$2) | $50,000.00 | ||
To Paid in capital in excess of par - common stock | $60,000.00 | ||
(To record issue of shares for purchase of building) | |||
6-Oct | Cash Dr (800*$110) | $88,000.00 | |
To Preferred Stock (800*$50) | $40,000.00 | ||
To Paid in capital in excess of par - preferred stock (800*$60) | $48,000.00 | ||
(To record issue of preferred stock) | |||
9-Oct | Cash Dr | $72,000.00 | |
To Common Stock (18000*$2) | $36,000.00 | ||
To Paid in capital in excess of par - common stock (18000*$2) | $36,000.00 | ||
(To record issue of common stock) | |||
10-Oct | Dividends Dr | $21,000.00 | |
To Dividend Payable - Preferred Stock ($40,000*6%) | $2,400.00 | ||
To Dividend Payable - Common Stock | $18,600.00 | ||
(To record dividend declared) | |||
25-Oct | Dividend Payable - Preferred stock Dr | $2,400.00 | |
Dividend Payable - Common stock Dr | $18,600.00 | ||
To Cash | $21,000.00 | ||
(To record payment of dividend) |
Solution 2:
D Cell Wireless | |
Balance Sheet - Stockholder's Equity Section | |
31-Oct-18 | |
Particulars | Amount |
Stockholders Equity: | |
Common Stock, $2 par, 100,000 shares authorized, 43,000 shares Issued and outstanding | $86,000.00 |
6% preferred stock, $50 par, 110000 shares authorized, 800 shares issued and outstanding | $40,000.00 |
Paid-in capital in excess of par value—common stock ($60,000 + $36,000) | $96,000.00 |
Paid-in capital in excess of par—preferred stock | $48,000.00 |
Total contributed capital | $270,000.00 |
Retained Earnings (Net Income - Dividend) | $66,000.00 |
Total Stockholder's Equity | $336,000.00 |