Question

On January 22, Zentric Corporation issued for cash 76,000 shares of no-par common stock at $15. On February 14, Zentric issued at par value 8,000 shares of preferred 6% stock, $50 par for cash. On August 30, Zentric issued for cash 12,000 shares of preferred 6% stock, $50 par at $65. Journalize the entries to record the January 22, February 14, and August 30 transactions. Refer to the Chart of Accounts for exact wording of account titles.

Answer 1

Zentric Corporation

Journal Entries:

January 22:

Debit Cash with $1,140,000

Credit Common Stock with $1,140,000

To record issue of 76,000 shares of no-par value common stock at $15 each.

February 14:

Debit Cash Account with $400,000

Credit Preferred 6% Stock with $400,000

To record the issue of 8,000 shares at $50 par.

August 30:

Debit Cash Account with $780,000

Credit Preferred 6% Stock with $600,000

Credit APIC - Preferred with $180,000

To record issue of 12,000 shares, $50 par at $65.

No Chart of Accounts was provided for exact wording of account titles.

Step-by-step explanation:

1. No-par common stock: When shares are issued at no-par, it means that there is no set par value. Par value is the nominal value of a share. Issuing at no-par implies that the amount realized from the sale would be credited to the Common Stock without any to the Additional Paid-in Capital (APIC).

2. Issue of preferred 6% stock at par value: This means that the stock was issued without additional paid-in capital. The stock was issued at the nominal value without premium.

3. Issue of preferred 6% stock, $50 par at $65: This stock was issued at a premium. More was charged above the par value. There is additional paid-in capital of $15 per share. This additional is credited to Additional Paid-in Capital - Preferred.