Question

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

Answer 1

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