Financial and Managerial Accounting (Looseleaf) (Custom Package)
Financial and Managerial Accounting (Looseleaf) (Custom Package)
6th Edition
ISBN: 9781259754883
Author: Wild
Publisher: MCG
Question
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Chapter 11, Problem 1PSA

1.

To determine

To explain: Transactions in the given journal entries.

1.

Expert Solution
Check Mark

Explanation of Solution

a.

Sale of common stock of $25, each issued at $30 and the number of shares is 10,000.

b.

Common stock of $25 each issued at $30 to the promoters of the company for their efforts to set up the company. Total number of shares issue is 6,000.

c.

Assets and liabilities acquired through common stock issue of $50,000. Common stock has a par value $25 and issued at $40.

d.

Sale of common stock of $25, each issued at $40 and the number of shares is 3,000.

2.

To determine

To compute: Number of common shares outstanding at the year end.

2.

Expert Solution
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Explanation of Solution

Given,
Shares issue in transaction a is 10,000.
Shares issue in transaction b is 5,000.
Shares issue in transaction c is 2,000.
Shares issue in transaction d is 3,000.

Formula to calculate number of shares outstanding is,

    NumberofSharesOutstanding=( SharesIssuedintransactiona +SharesIssuedintransactionb +SharesIssuedintransactionc +SharesIssuedintransactiond )

Substitute 10,000 for shares issue in transaction a, 5,000 for shares issue in transaction b, 2,000 for shares issue in transaction c and 3,000 for shares issue in transaction d.

    NumberofSharesOutstanding=10,000+5,000+2,000+3,000 =20,000

Hence, numbers of shares outstanding at the year end are 20,000.

3.

To determine

To compute: Minimum legal capital.

3.

Expert Solution
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Explanation of Solution

Given,
Common stock in transaction a is $250,000.
Common stock in transaction b is $125,000.
Common stock in transaction c is $50,000.
Common stock in transaction d is $75,000.

Formula to calculate minimum legal capital is,

    MinimumLegalCapital=( Common Stockintransactiona +Common Stockintransactionb +Common Stockintransactionc +Common Stockintransactiond )

Substitute $250,000 for common stock in transaction a, $125,000 for common stock in transaction b, $50,000 for common stock in transaction c and $75,000 for common stock in transaction d,

    NumberofSharesOutstanding=$250,000+$125,000+$50,000+$75,000 =$500,000

Hence, minimum share capital at the year end is $500,000.

4.

To determine

To compute: Total paid in capital at the year end.

4.

Expert Solution
Check Mark

Explanation of Solution

Given,
Paid in capital in transaction a is $250,000.
Paid in capital in transaction b is $125,000.
Paid in capital in transaction c is $50,000.
Paid in capital in transaction d is $75,000.

Formula to calculate paid in capital is,

    TotalPaidinCapital=( MinimumLegalCapital +Paidincapitalintransactiona +Paidincapitalintransactionb +Paidincapitalintransactionc +Paidincapitalintransactiond )

Substitute $500,000 for minimum legal capital, $50,000 for paid in capital in transaction a, $25,000 for paid in capital in transaction b, $30,000 for paid in capital in transaction c and $45,000 for paid in capital in transaction d.

    NumberofSharesOutstanding=( $500,000+$50,000+$25,000 +$30,000+$45,000 ) =$650,000

Hence, total paid in capital at the year end is $650,000.

5.

To determine

To compute: Book value of share.

5.

Expert Solution
Check Mark

Explanation of Solution

Given,
Stockholder’s equity is $695,000.
Preferred stock is $0.
Number of common shares is 20,000.

Formula to calculate book value per share is,

    BookValueperShare= Stockholders'EquityPreferredStock NumberofCommonShares

Substitute $695,000 for stockholder’s equity, $0 for preferred stock and 20,000 for number of common shares.

    Bookvaluepershare= $695,000$0 20,000 =$34.75

Hence, book value per share is $34.75.

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Chapter 11 Solutions

Financial and Managerial Accounting (Looseleaf) (Custom Package)

Ch. 11 - List the general rights of common stockholders.Ch. 11 - Prob. 7DQCh. 11 - Prob. 8DQCh. 11 - Prob. 9DQCh. 11 - Prob. 10DQCh. 11 - Prob. 11DQCh. 11 - Prob. 12DQCh. 11 - Prob. 13DQCh. 11 - Prob. 14DQCh. 11 - Prob. 15DQCh. 11 - Prob. 16DQCh. 11 - Prob. 17DQCh. 11 - Prob. 18DQCh. 11 - Prob. 19DQCh. 11 - Prob. 20DQCh. 11 - Prob. 21DQCh. 11 - Prob. 22DQCh. 11 - Prob. 1QSCh. 11 - Prob. 2QSCh. 11 - Prob. 3QSCh. 11 - Prob. 4QSCh. 11 - Prob. 5QSCh. 11 - Prob. 6QSCh. 11 - Prob. 7QSCh. 11 - Prob. 8QSCh. 11 - Prob. 9QSCh. 11 - Prob. 10QSCh. 11 - Prob. 11QSCh. 11 - Prob. 12QSCh. 11 - Prob. 13QSCh. 11 - Prob. 14QSCh. 11 - QS 11-15 Basic earnings per share A1 Epic company...Ch. 11 - Prob. 16QSCh. 11 - Prob. 17QSCh. 11 - Prob. 18QSCh. 11 - Prob. 19QSCh. 11 - Prob. 1ECh. 11 - Prob. 2ECh. 11 - Prob. 3ECh. 11 - Prob. 4ECh. 11 - Prob. 5ECh. 11 - Prob. 6ECh. 11 - Exercise 11–7 Identifying characteristics of...Ch. 11 - Prob. 8ECh. 11 - Prob. 9ECh. 11 - Prob. 10ECh. 11 - Prob. 11ECh. 11 - Prob. 12ECh. 11 - Prob. 13ECh. 11 - Prob. 14ECh. 11 - Prob. 15ECh. 11 - Prob. 16ECh. 11 - Prob. 17ECh. 11 - Prob. 18ECh. 11 - Prob. 1PSACh. 11 - Prob. 2PSACh. 11 - Prob. 3PSACh. 11 - Prob. 4PSACh. 11 - Prob. 5PSACh. 11 - Prob. 1PSBCh. 11 - Prob. 2PSBCh. 11 - Prob. 3PSBCh. 11 - Prob. 4PSBCh. 11 - Prob. 5PSBCh. 11 - Prob. 11SPCh. 11 - Prob. 1GLPCh. 11 - Prob. 2GLPCh. 11 - Prob. 1BTNCh. 11 - Prob. 2BTNCh. 11 - Prob. 3BTNCh. 11 - Prob. 4BTNCh. 11 - Prob. 5BTNCh. 11 - Prob. 6BTNCh. 11 - Prob. 7BTNCh. 11 - Prob. 8BTNCh. 11 - Prob. 9BTN
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