Question

Ayayai Corp. was organized on January 1, 2017. It is authorized to issue 19,000 shares of 5%, $50 par value preferred stock and 450,000 shares of no-par common stock with a stated value of $1 per share. The following stock transactions were completed during the first year.

Jan. 10 Issued 65,000 shares of common stock for cash at $4 per share.
Mar. 1 Issued 1,100 shares of preferred stock for cash at $54 per share.
May 1 Issued 110,000 shares of common stock for cash at $5 per share.
Sept. 1 Issued 4,000 shares of common stock for cash at $4 per share.
Nov. 1 Issued 2,000 shares of preferred stock for cash at $54 per share.
Journalize these entries.

Answer 1

Answer and Explanation:

The journal entries are shown below:

On Jan 10

Cash (65,000 shares × $4) $260,000

To Common Stock (65,000 shares × $1) $65,000

To Paid in capital in excess of stated value - Common Stock $195,000

(Being the issuance of the common stock is recorded)

On Mar 1

Cash (1,100 shares × $54) $59,400

To Preferred stock (1,100 shares × $50) $55,000

To Paid in capital in excess of par value - Preferred Stock $4,400

(Being the issuance of the preferred stock is recorded)

On May 1

Cash (110,000 shares × $5) $550000

To Common Stock (110,000 shares × $1) $110,000

To Paid in capital in excess of stated value - Common Stock $440,000

(Being the issuance of the common stock is recorded)

On Sep 1

Cash (4,000 × $4) $16,000

To Common Stock (4,000 × $1) $4000

To Paid in capital in excess of stated value - Common Stock $12,000

(Being the issuance of the common stock is recorded)

On Nov 1

Cash (2,000 shares × $54) $108,000

To Preferred stock (2,000 shares × $50) $100,000

To Paid in capital in excess of par value - Preferred Stock $8,000

(Being the issuance of the preferred stock is recorded)