Question

POSTING QUESTION INVOLVING : Journalizing issuance of stock and preparing the stockholders equity section of the balance sheet

Known History: As of March 23-Common Stock $690

The Charter of Trugreen Corporation authorizes the issuance of 900 shares of preferred stock and 1,400 shares of common stock. During a two-month period Trugreen completed these stock-issuance transactions:

Mar 23 Issued 230 shares of $3 par value common stock for cash of $15 per share.

April 12 Received inventory with a market value of $27,000 and equipment with a market value of $19,000 for 320 shares of the $3 par value common stock.

April 17 Issued 900 shares of 5%, $20 par value preferred stock for $20 per share.

Required to figure out two things

Record the transactions in the general journal by Date, Accounts and Explanations, Debits, and credits

Prepare the stockholders equity section of the Trugreen balance sheet as of April 30, 2018, for the transactions in this exercise Retained Earnings has a balance of $73,000 at April 30th.

Balance Sheet Partial (NOT SURE IF THE DATE, NAME, OR $ AMOUNT SHOULD BE ABOVE THIS)

then Stockholder's equity (AGAIN NOT SURE WHAT SHOULD BE ABOVE THIS)

Paid In Capital: Preferred Stock , 5% , $20 par value ; 900 shares authorized, issued and outstanding= AMOUNT?

Common stock --$3 Par Value ; 1,400 shares authorized, 550 shares issued and outstanding = AMOUNT?

Paid-in captial in Excess of par-Common=AMOUNT?

total paid in capital=AMOUNT?

Retained Earnings=AMOUNT?

Total stockholders Equity=AMOUNT?

Answer 1

1. Authorised shares:

Authorised shares are those shares a company has been authorised to issue as per Law. A company cannot issue more than these shares. However a company after following prescribed conditions by the law can issue more than these shares.

Preferred stock = 900 shares

Common or Equity stock = 1,400 shares

2. Things to remember while journalising the stock issue transactipons:

• Paid in capital in excess of par value or Additional pain in capital - Additional paid in capital represents the excess paid by an investor over and above the par-value price of a stock issue. So whenever common stock or preferred stock is issued above par value, "Adddition paid in capital" or "Paid in capital in excess of par value" account shall be credited.

3. Journal Entries for the stock-Issue transactions during the two month period:

Date	Accounts Tiltes and Description	Debit	Credit	Calculation (Not part of Journal )
March 23	Cash a/c	$3,450		230 shares x $15
	Common stock a/c		$690	230 shares x $3
	Paid-in captial in Excess of par-Common stock a/c		$2,760	230 shares x ($15 - $3)
	[Being Common stock issued at premium for cash]
April 12	Inventory a/c	$27,000
	Equipment a/c	$19,000
	Common stock a/c		$960	$320 shares x $3
	Paid-in captial in Excess of par-Common stock a/c		$45,040	Remaining amount
	[Being Common stock issued in exchange of Inventoty and equipment]
April 17	Cash a/c	$18,000		900 shares c $20
	5% Preferred stock a/c		$18,000	900 shares x $20
	[Being preferred stock issued at par value]

4. Stockholders Equity section as on April. 2018

Trugreen Corporation
Balance Sheet (Partial) April 30, 2018
Stockholder's Equity
Paid In Capital or Contributed Capital		Calculation - Not part of Balance sheet
Preferred Stock , 5% , $20 par value ; 900 shares authorized, issued and outstanding	$18,000	900 shares x $18
Common stock --$3 Par Value ; 1,400 shares authorized, 550 shares issued and outstanding	$1,650	550 shares x $3
Paid-in captial in Excess of par-Common	$47,800	$2760 + $45,040
Total Paid In Capital	$67,450
Retained Earnings	$73,000	Given in the question
Total stockholders Equity	$140,450