FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Beauty Island Corporation began operations in April by completing these transactions:
Apr01... issued 60,000 shares of $5 par value common stock for cash at $13 per share.
Apr19... issued 2,000 shares of common stock to attorneys in "payment" of their bill of
$27,500 for organization costs.
Apr20... issued 1,000 shares of $1 par value preferred stock for $6 cash per share.
Journalize the issuing of common & preferred shares, (assuming shares are not publicly traded).
Apr 01
Apr 19
Apr 20
The separation of paid-in capital from earned capital concerns the issue of “legal capital". "Legal"
capital limits dividends to within total of retained earnings and any additional paid-in capital.
"Capital" is categorized as "Paid-in" and "Earned". Paid-in capital (also called contributed capital)
is provided by investors when they buy a company's initially issued shares. Earned capital is
retained earnings, the accumulated income a company has earned since its inception.
These distinctions only apply when the corp issues stock. Irrelevant if shares bought in “market”.
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Transcribed Image Text:Beauty Island Corporation began operations in April by completing these transactions: Apr01... issued 60,000 shares of $5 par value common stock for cash at $13 per share. Apr19... issued 2,000 shares of common stock to attorneys in "payment" of their bill of $27,500 for organization costs. Apr20... issued 1,000 shares of $1 par value preferred stock for $6 cash per share. Journalize the issuing of common & preferred shares, (assuming shares are not publicly traded). Apr 01 Apr 19 Apr 20 The separation of paid-in capital from earned capital concerns the issue of “legal capital". "Legal" capital limits dividends to within total of retained earnings and any additional paid-in capital. "Capital" is categorized as "Paid-in" and "Earned". Paid-in capital (also called contributed capital) is provided by investors when they buy a company's initially issued shares. Earned capital is retained earnings, the accumulated income a company has earned since its inception. These distinctions only apply when the corp issues stock. Irrelevant if shares bought in “market”.
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