ACCT 23020 Lecture Notes - Lecture 36: Initial Public Offering, Common Stock, Roku

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emmagennaro

3 Feb 2020

School

Kent State University

Department

Accounting

Course

ACCT 23020

Professor

Wendy M.Tietz

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Document Summary

Learning objective 2, part 1: account for the issuance of common stock for cash. Common stock: companies issue stock to raise large sums of money for various projects, the first time a private company issues stock to the public, it has an initial public offering (ipo) Example 1: issue common stock at par for cash: on september 4, kingston corporation issued 1,000 shares of its common stock. The issue price was per share, which is equal to the par value of the stock. Example 2: issue common stock above par for cash: on october 3, korner corporation issued 1,000 shares of its common stock, which has a par value of per share. Example 3: issue no-par common stock for cash: on july 11, fallon corporation issued 1,000 shares of its no-par common stock. Issuing stock causes both assets and equity to increase.

Related Questions

1. A company purchases 1,000 shares of its $10 par value common stock when the market price per share is $25. The entry to record the treasury stock purchase is:

a. Debit Treasury Stock, Common, $25,000; credit Cash $25,000.

b. Debit Treasury Stock, Common, $10,000; debit Additional Paid-in Capital, Common, $15,000; credit Cash $25,000.

c. Debit Common Stock, $10,000; debit Additional Paid-in Capital, Common, $15,000; credit Cash $25,000.

d. Debit Cash $25,000; credit Treasury Stock, Common, $25,000.

2. Tri-City Corporation reports on its balance sheet 1,000 shares of $100 par value, 5%, cumulative, preferred stock; 6,000 shares issued, 5,000 outstanding, of $10 par value common stock; Additional Paid-in Capital, Common of $40,000; 1,000 shares of Treasury Stock, Common at $10,000; and Retained Earnings of $80,000. The preferred shares are callable at $110, and no dividends are in arrears.

The book value per share of Tri-City's common stock is

3.Johanna Corporation issues 1,000 shares of $20 par value stock for $50,000. The entry to record the stock issue is:

a. Debit Cash, $50,000; Credit Common Stock $50,000.

b. Debit Common Stock, $20,000; debit Additional Paid-in Capital, Common, $30,000; credit Cash, $50,000.

c. Debit Cash, $50,000; credit Common Stock, $20,000; credit Additional Paid-in Capital, Common, $30,000.

d. Debit Common Stock, $50,000; credit Cash, $50,000.

peachmoose371

Prepare journalentries to record each of the following independent stock issuesituations.

(a)		Sherri Hui Corporation issued100,000 shares of $1 par value common stock. The issue price was$30 per share.

(b)		Ariana Corporation issued50,000 shares of no par common stock for $10 per share.

(c)		Laser Golf issued 40,000shares of $100 par value preferred stock. The issue price was $102per share.

(d)		Charleston Industries issued5,000 shares of $5 par value common stock for land with a fairvalue of $75,000.

redimpala465

Jude Corporation has been authorized to issue 20,000 shares of$100 par value, 10%, noncumulative preferred stock and 1,000,000shares of no-par common stock. The corporation assigned a $2.50stated value to the common stock. At December 31, 2014, the ledgercontained the following balances pertaining to stockholder'sequity.

Perferred Stock $120,000

Pain-in Capital in Excess of Par- Preferred Stock 12,000

Common Stock 1,000,000

Paid-in Capital in Excess of Stated Value- Common Stock1,600,000

Treasury Stock (1,000 common shares) 9,000

Paid-in Capital from Treasury Stock 1,000

Retained Earnings 82,000

The preferred stock was issued for land having a fair value of$132,000. All common stock issued was for cash. In November, 1,500shares of common stock were purchased for the treasury at a pershare of $9. In December, 500 shares of treasury stock were soldfor $11 per share. No dividends were declared in 2014.

Prepare the stockholder's equity section at December 31,2014

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ACCT 23020 Lecture Notes - Lecture 36: Initial Public Offering, Common Stock, Roku

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