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In: Accounting

Exercise 15-9 Pistons Inc. recently hired a new accountant with extensive experience in accounting for partnerships....

Exercise 15-9

Pistons Inc. recently hired a new accountant with extensive experience in accounting for partnerships. Because of the pressure of the new job, the accountant was unable to review what he had learned earlier about corporation accounting. During the first month, he made the following entries for the corporation’s capital stock.

Date

Account Titles and Explanation

Debit

Credit

May 2

Cash

228,650

  
 

   Capital Stock

  

228,650
 

(Issued 13,450 shares of $5 par value common stock at $17 per share)

    

May 10

Cash

713,400

  
 

   Capital Stock

  

713,400
 

(Issued 11,890 shares of $30 par value preferred stock at $60 per share)

    

May 15

Capital Stock

42,900

  
 

   Cash

  

42,900
 

(Purchased 2,860 shares of common stock for the treasury at $15 per share)

    

May 31

Cash

10,070

  
 

   Capital Stock

  

5,924
 

   Gain on Sale of Stock

  

4,146
 

(Sold 530 shares of treasury stock at $19 per share)

    


On the basis of the explanation for each entry, prepare the entries that should have been made for the capital stock transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Solutions

Expert Solution

Date Particulars Debit $ Credit $
02-May Cash 228,650
Common stock     67,250
Paid in capital 161,400
(Issued 13,450 shares of $5 par value common stock at $17 per share)
10-May Cash 713,400
Preferred stock 356,700
Paid in capital 356,700
(Issued 11,890 shares of $30 par value preferred stock at $60 per share)
15-May Treasury stock     42,900
Cash     42,900
(Purchased 2,860 shares of common stock for the treasury at $15 per share)
31-May Cash     10,070
Treasury stock       7,950
Paid in capital       2,120
(Sold 530 shares of treasury stock at $19 per share)

ekkarill92 answered 2 years ago
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