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

1.

To determine

To explain: Transaction of the journal entries.

1.

Expert Solution
Check Mark

Explanation of Solution

a.

Sale of common stock of $1, each issued at $40 and the number of shares is 3,000.

b.

Common stock of $1 each issued at $40 to the promoters of the company for their efforts to set up the company. Total number of shares issue is 1,000.

c.

Assets and liabilities acquired through common stock issue of $800. Common stock has a par value $1 and issued at $50.

d.

Sale of common stock of $1, each issued at $50 and the number of shares is 1,200.

2.

To determine

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

2.

Expert Solution
Check Mark

Explanation of Solution

Given,
Shares issue in transaction ‘a.’ is 3,000.
Shares issue in transaction ‘b.’ is 1,000.
Shares issue in transaction ‘c.’ is 800.
Shares issue in transaction ‘d.’ is 1,200.

Formula for number of shares outstanding is:

    Numberofsharesoutstanding=( Sharesissuedintransaction'a' +Sharesissuedintransaction'b' +Sharesissuedintransaction'c' +Sharesissuedintransaction'd' )

Substitute 3,000 for shares issue in transaction a, 1,000 for shares issue in transaction b, 800 for shares issue in transaction c and 1,200 for shares issue in transaction d in the above formula,

    NumberofSharesOutstanding=3,000+1,000+800+1,200 =6,000

Hence, numbers of shares outstanding at the yearend are 6,000.

3.

To determine

To compute: Minimum legal capital.

3.

Expert Solution
Check Mark

Explanation of Solution

The number of outstanding share is 6,000 (calculated in part 2.).

Formula for minimum legal capital is:

    MinimumLegalCapital=Number of shares outstanding×Par value per share

Substitute 6,000 for number of outstanding share, and $1 for par value per share in the above formula,

    Minimumlegalcapital=6,000×$1 =$6,000

Hence, minimum legal capital is $6,000.

4.

To determine

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

4.

Expert Solution
Check Mark

Explanation of Solution

Given,
Paid in capital in transaction a is $117,000.
Paid in capital in transaction b is $39,000.
Paid in capital in transaction c is $39,200.
Paid in capital in transaction d is $58,800.

Formula for paid in capital is:

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

Substitute $6,000 for minimum legal capital, $120,000 for paid in capital in transaction a, $40,000 for paid in capital in transaction b, $40,000 for paid in capital in transaction c and $60,000 for paid in capital in transaction d in the above formula,

    Totalpaidincapital=( $120,000+$40,000 +$40,000+$60,000 ) =$260,000

Hence, total paid in capital at the yearend is $260,000.

5.

To determine

To compute: Book value of share.

5.

Expert Solution
Check Mark

Explanation of Solution

Stockholder’s equity is $283,200.
Preferred stock is $0.
Number of common shares is 6,000.

Formula for book value per share is:

    Bookvaluepershare= Stockholders'EquityPreferredStock NumberofCommonShares

Substitute, $283,200 for stockholder’s equity, $0 for preferred stock and 6,000 for number of common shares in the above formula,

    Bookvaluepershare= $283,200$0 6,000 =$47.2

Hence, the book value per share is $47.2.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

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
Knowledge Booster
Background pattern image
Recommended textbooks for you
Text book image
FINANCIAL ACCOUNTING
Accounting
ISBN:9781259964947
Author:Libby
Publisher:MCG
Text book image
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Text book image
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Text book image
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Text book image
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Text book image
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education