Question

Mendoza Corporation was organized on January 1, 2017. It is authorized to issue 20,000 shares of 6%, $40 par value preferred stock, and 500,000 shares of no-par common stock with a stated value of $2 per share. The following stock transactions were completed during the fi rst year.

Jan. 10 Issued 100,000 shares of common stock for cash at $3 per share.

Mar. 1 Issued 10,000 shares of preferred stock for cash at $55 per share. Apr. 1 Issued 25,000 shares of common stock for land. The asking price of the land was $90,000. The company’s estimate of fair value of the land was $75,000. May 1 Issued 75,000 shares of common stock for cash at $4 per share.

Aug. 1 Issued 10,000 shares of common stock to attorneys in payment of their bill for $50,000 for services performed in helping the company organize. Sept. 1 Issued 5,000 shares of common stock for cash at $6 per share.

Nov. 1 Issued 2,000 shares of preferred stock for cash at $60 per share.

(a) Journalize the transactions.

(b) Post to the stockholders’ equity accounts. (Use J1 as the posting reference.)

(c) Prepare the paid-in capital section of stockholders’ equity at December 31, 2017.

Answer 1

(a).

Date	Accounts Title & Explnation	Debit	Credit
Jan. 10	Cash (100000 * $3)	$300000
	Common Stock		$200000
	Paid in capital excess of stated value – Common         Stock		$100000
March 1	Cash (10000 * $55)	$550000
	Preferred Stock (10000 * $40)		$400000
	Paid in capital excess of par value – Preferred         Stock		$150000
April 1	Land	$75000
	Common Stock (25000 * $2)		$50000
	Paid in capital excess of stated value – Common         Stock		$25000
May 1	Cash (75000 * $4)	$300000
	Common Stock (75000 * $2)		$150000
	Paid in capital excess of stated value – Common         Stock		$150000
Aug. 1	Organizational Expense	$50000
	Common Stock (10000 * $2)		$20000
	Paid in capital excess of stated value – Common         Stock		$30000
Sep. 1	Cash (5000 * $6)	$30000
	Common Stock (5000 * $2)		$10000
	Paid in capital excess of stated value – Common         stock		$20000
Nov. 1	Cash (2000 * $60)	$120000
	Preferred Stock (2000 * $40)		$80000
	Paid in capital excess of par value – Preferred         stock		$40000

(b).

Preferred Stock
		March 1	$400000
		Nov. 1	$80000
		Balance	$480000

Common Stock
		Jan. 10	$200000
		April 1	$50000
		May 1	$150000
		Aug. 1	$20000
		Sep. 1	$10000
		Balance	$430000

Paid-in capital in excess of par value – Preferred Stock
		March 1	$150000
		Nov. 1	$40000
		Balance	$190000

Paid-in capital in excess of stated value – Common Stock
		Jan. 10	$100000
		April 1	$25000
		May 1	$150000
		Aug. 1	$30000
		Sep. 1	$20000
		Balance	$325000

(C).

Mendoza Corporation
Partial Balance Sheet
December 31, 2017
Stockholders’ Equity;
Paid in capital
Capital Stock;
6% Preferred Stock, $40 par value, 20000 shares authorized and 12000 shares issued	$480000
Common stock, No par value, $2 stated value, 500000 shares authorized and 215000 shares issued	$430000
Total capital stock		$910000
Additional paid-in capital;
Paid-in capital in excess of par value – Preferred Stock	$190000
Paid-in capital in excess of stated value – Common Stock	$325000
Total additional paid-in capital		$515000
Total paid-in capital		$1425000