Connect Access Card For Fundamental Accounting Principles
Connect Access Card For Fundamental Accounting Principles
24th Edition
ISBN: 9781260158526
Author: John J Wild
Publisher: McGraw-Hill Education
Question
Book Icon
Chapter 13, Problem 1APSA
To determine

Concept Introduction:

Stockholders Equity Transactions:

Stockholders equity Transactions refer to, transactions carried out by an organisation by issuing its shares. The main purpose of issuance of shares is to raise funds, but shares could also be issued, to pay dividends in the form of "Stock Dividends", Pay off Lenders, Creditors, and Promoters in lieu of Cash etc.

Requirement 1

The transaction(s) underlying each journal entry (a) through (d).

  1. Being 10000 Common shares of Par Value $25, issued for $30 per Share.
  2. Being Organisation Expenses paid, by issuing 5000 Common Shares of Par Value $25 for $30 per Share.
  3. Being $43000, Accounts Receivable worth $15000, Building of $ 81500 and Notes Payable of $ 59500, Introduced by Issuing 2000 Common Shares of Par Value $25, For $40 per share.
  4. Being 3000 Common Shares of Par Value $25, Issued For $40 per Share.

The above solution can be explained as below:

  1. Cash Received from Shares is $300000, of which $50000 has been paid in excess of par value. Thus Par Value of Shares are $250000.

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=25000025

      No. of Shares Issued=10000 Shares

  2. Total Organisation Expenses is $150000, of which $25000 has been paid in Excess of Par Value. Thus Par Value is $ 125000.

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=12500025

      No. of Shares Issued=5000 Shares

  3. Total Assets brought in amount to $139500, and Total Liabilities introduced is $59500, Thus net assets are worth $80000. Of $80000, $30000 has been considered as amount in excess of Par Value. Thus Par Value is $50000

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=5000025

      No. of Shares Issued=2000 Shares

  4. Cash Received from Shares is $300000, of which $50000 has been paid in excess of par value. Thus Par Value of Shares are $250000.

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=7500025

      No. of Shares Issued=3000 Shares

Concept Introduction:

Stockholders Equity Transactions:

Stockholders equity Transactions refer to, transactions carried out by an organisation by issuing its shares. The main purpose of issuance of shares is to raise funds, but shares could also be issued, to pay dividends in the form of "Stock Dividends", Pay off Lenders, Creditors, Promoters in lieu of Cash etc.

Requirement 2:

To Explain:

How many shares are outstanding at the end of the year?

20000 Shares are Outstanding at the end of the year.

The above solution can be explained as below:

  1. Cash Received from Shares is $300000, of which $50000 has been paid in excess of par value. Thus Par Value of Shares are $250000.

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=25000025

      No. of Shares Issued=10000 Shares

  2. Total Organisation Expenses is $150000, of which $25000 has been paid in Excess of Par Value. Thus Par Value is $ 125000.

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=12500025

      No. of Shares Issued=5000 Shares

  3. Total Assets brought in amount to $139500, and Total Liabilities introduced is $59500, Thus net assets are worth $80000. Of $80000, $30000 has been considered as amount in excess of Par Value. Thus Par Value is $50000

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=5000025

      No. of Shares Issued=2000 Shares

  4. Cash Received from Shares is $300000, of which $50000 has been paid in excess of par value. Thus Par Value of Shares are $250000.

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=7500025

      No. of Shares Issued=3000 Shares

    Thus, Total No of Shares are 20000 Shares Outstanding at the end of the year(Adding from a through d).

Concept Introduction:

Paid in Capital:

Paid in Capital is total amounts of cash received or Services/Assets or Liabilities valued in lieu of Shares of the Company.

Requirement 3

Total Amount of Paid in Capital at the end of the year?

Total Paid in Capital at the end of the year, is $650000.

After Adding total Amounts of Cash Received in Entry (a) and (d), Total amounts of Cash is $420000.

Total Value of Organization Expenses are valued at $150000 in (b)

Total Value of Assets and Liabilities introduced in (c) amounts to $80000

Thus Total of all the above comes to $650000.

  1. Book Value per Share

Concept Introduction:

Book Value Per Share:

Book Value per share is a simple calculation of Total Shareholders Equity, divided by number of shares outstanding at the end of the year.

Requirement 4

Book Value per Share.

Book Value per Share is $59.75 per share.

The above solution can be explained as below:

  Book Value Per Share=Total Shareholders EquityTotal No. of Shares Outstanding

  Book Value Per Share=500000+69500020000

  Book Value Per Share=119500020000

  Book Value Per Share= $59.75

Expert Solution
Check Mark

Answer to Problem 1APSA

  1. Being 10000 Common shares of Par Value $25, issued for $30 per Share.
  2. Being Organisation Expenses paid, by issuing 5000 Common Shares of Par Value $25 for $30 per Share.
  3. Being $43000, Accounts Receivable worth $15000, Building of $ 81500 and Notes Payable of $ 59500, Introduced by Issuing 2000 Common Shares of Par Value $25, For $40 per share.
  4. Being 3000 Common Shares of Par Value $25, Issued For $40 per Share.

The above solution can be explained as below:

  1. Cash Received from Shares is $300000, of which $50000 has been paid in excess of par value. Thus Par Value of Shares are $250000.

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=25000025

      No. of Shares Issued=10000 Shares

  2. Total Organisation Expenses is $150000, of which $25000 has been paid in Excess of Par Value. Thus Par Value is $ 125000.

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=12500025

      No. of Shares Issued=5000 Shares

  3. Total Assets brought in amount to $139500, and Total Liabilities introduced is $59500, Thus net assets are worth $80000. Of $80000, $30000 has been considered as amount in excess of Par Value. Thus Par Value is $50000

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=5000025

      No. of Shares Issued=2000 Shares

  4. Cash Received from Shares is $300000, of which $50000 has been paid in excess of par value. Thus Par Value of Shares are $250000.

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=7500025

      No. of Shares Issued=3000 Shares

Concept Introduction:

Stockholders Equity Transactions:

Stockholders equity Transactions refer to, transactions carried out by an organisation by issuing its shares. The main purpose of issuance of shares is to raise funds, but shares could also be issued, to pay dividends in the form of "Stock Dividends", Pay off Lenders, Creditors, Promoters in lieu of Cash etc.

Requirement 2:

To Explain:

How many shares are outstanding at the end of the year?

20000 Shares are Outstanding at the end of the year.

The above solution can be explained as below:

  1. Cash Received from Shares is $300000, of which $50000 has been paid in excess of par value. Thus Par Value of Shares are $250000.

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=25000025

      No. of Shares Issued=10000 Shares

  2. Total Organisation Expenses is $150000, of which $25000 has been paid in Excess of Par Value. Thus Par Value is $ 125000.

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=12500025

      No. of Shares Issued=5000 Shares

  3. Total Assets brought in amount to $139500, and Total Liabilities introduced is $59500, Thus net assets are worth $80000. Of $80000, $30000 has been considered as amount in excess of Par Value. Thus Par Value is $50000

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=5000025

      No. of Shares Issued=2000 Shares

  4. Cash Received from Shares is $300000, of which $50000 has been paid in excess of par value. Thus Par Value of Shares are $250000.

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=7500025

      No. of Shares Issued=3000 Shares

    Thus, Total No of Shares are 20000 Shares Outstanding at the end of the year(Adding from a through d).

Concept Introduction:

Paid in Capital:

Paid in Capital is total amounts of cash received or Services/Assets or Liabilities valued in lieu of Shares of the Company.

Requirement 3

To Determine:

Total Amount of Paid in Capital at the end of the year?

Total Paid in Capital at the end of the year, is $650000.

After Adding total Amounts of Cash Received in Entry (a) and (d), Total amounts of Cash is $420000.

Total Value of Organization Expenses are valued at $150000 in (b)

Total Value of Assets and Liabilities introduced in (c) amounts to $80000

Thus Total of all the above comes to $650000.

  1. Book Value per Share

Concept Introduction:

Book Value Per Share:

Book Value per share is a simple calculation of Total Shareholders Equity, divided by number of shares outstanding at the end of the year.

Requirement 4

To Determine:

Book Value per Share.

Book Value per Share is $59.75 per share.

The above solution can be explained as below:

  Book Value Per Share=Total Shareholders EquityTotal No. of Shares Outstanding

  Book Value Per Share=500000+69500020000

  Book Value Per Share=119500020000

  Book Value Per Share= $59.75

Explanation of Solution

The above solution can be explained as below:

  1. Cash Received from Shares is $300000, of which $50000 has been paid in excess of par value. Thus Par Value of Shares are $250000.

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=25000025

      No. of Shares Issued=10000 Shares

  2. Total Organisation Expenses is $150000, of which $25000 has been paid in Excess of Par Value. Thus Par Value is $ 125000.

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=12500025

      No. of Shares Issued=5000 Shares

  3. Total Assets brought in amount to $139500, and Total Liabilities introduced is $59500, Thus net assets are worth $80000. Of $80000, $30000 has been considered as amount in excess of Par Value. Thus Par Value is $50000

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=5000025

      No. of Shares Issued=2000 Shares

  4. Cash Received from Shares is $300000, of which $50000 has been paid in excess of par value. Thus Par Value of Shares are $250000.

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=7500025

      No. of Shares Issued=3000 Shares

To determine

Concept Introduction:

Stockholders Equity Transactions:

Stockholders equity Transactions refer to, transactions carried out by an organisation by issuing its shares. The main purpose of issuance of shares is to raise funds, but shares could also be issued, to pay dividends in the form of "Stock Dividends", Pay off Lenders, Creditors, Promoters in lieu of Cash etc.

Requirement 2:

To Explain:

How many shares are outstanding at the end of the year?

Expert Solution
Check Mark

Answer to Problem 1APSA

20000 Shares are Outstanding at the end of the year.

The above solution can be explained as below:

  1. Cash Received from Shares is $300000, of which $50000 has been paid in excess of par value. Thus Par Value of Shares are $250000.

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=25000025

      No. of Shares Issued=10000 Shares

  2. Total Organisation Expenses is $150000, of which $25000 has been paid in Excess of Par Value. Thus Par Value is $ 125000.

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=12500025

      No. of Shares Issued=5000 Shares

  3. Total Assets brought in amount to $139500, and Total Liabilities introduced is $59500, Thus net assets are worth $80000. Of $80000, $30000 has been considered as amount in excess of Par Value. Thus Par Value is $50000

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=5000025

      No. of Shares Issued=2000 Shares

  4. Cash Received from Shares is $300000, of which $50000 has been paid in excess of par value. Thus Par Value of Shares are $250000.

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=7500025

      No. of Shares Issued=3000 Shares

    Thus, Total No of Shares are 20000 Shares Outstanding at the end of the year(Adding from a through d).

Concept Introduction:

Paid in Capital:

Paid in Capital is total amounts of cash received or Services/Assets or Liabilities valued in lieu of Shares of the Company.

Requirement 3

To Determine:

Total Amount of Paid in Capital at the end of the year?

Total Paid in Capital at the end of the year, is $650000.

After Adding total Amounts of Cash Received in Entry (a) and (d), Total amounts of Cash is $420000.

Total Value of Organization Expenses are valued at $150000 in (b)

Total Value of Assets and Liabilities introduced in (c) amounts to $80000

Thus Total of all the above comes to $650000.

  1. Book Value per Share

Concept Introduction:

Book Value Per Share:

Book Value per share is a simple calculation of Total Shareholders Equity, divided by number of shares outstanding at the end of the year.

Requirement 4

To Determine:

Book Value per Share.

Book Value per Share is $59.75 per share.

The above solution can be explained as below:

  Book Value Per Share=Total Shareholders EquityTotal No. of Shares Outstanding

  Book Value Per Share=500000+69500020000

  Book Value Per Share=119500020000

  Book Value Per Share= $59.75

Explanation of Solution

The above solution can be explained as below:

  1. Cash Received from Shares is $300000, of which $50000 has been paid in excess of par value. Thus Par Value of Shares are $250000.

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=25000025

      No. of Shares Issued=10000 Shares

  2. Total Organisation Expenses is $150000, of which $25000 has been paid in Excess of Par Value. Thus Par Value is $ 125000.

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=12500025

      No. of Shares Issued=5000 Shares

  3. Total Assets brought in amount to $139500, and Total Liabilities introduced is $59500, Thus net assets are worth $80000. Of $80000, $30000 has been considered as amount in excess of Par Value. Thus Par Value is $50000

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=5000025

      No. of Shares Issued=2000 Shares

  4. Cash Received from Shares is $300000, of which $50000 has been paid in excess of par value. Thus Par Value of Shares are $250000.

      No. of Shares Issued=Total Par Value of SharesPar Value Per Share

      No. of Shares Issued=7500025

      No. of Shares Issued=3000 Shares

    Thus, Total No of Shares are 20000 Shares Outstanding at the end of the year(Adding from a through d).

To determine

Concept Introduction:

Paid in Capital:

Paid in Capital is total amounts of cash received or Services/Assets or Liabilities valued in lieu of Shares of the Company.

Requirement 3

Total Amount of Paid in Capital at the end of the year?

Expert Solution
Check Mark

Answer to Problem 1APSA

Total Paid in Capital at the end of the year, is $650000.

Explanation of Solution

After Adding total Amounts of Cash Received in Entry (a) and (d), Total amounts of Cash is $420000.

Total Value of Organization Expenses are valued at $150000 in (b)

Total Value of Assets and Liabilities introduced in (c) amounts to $80000

Thus Total of all the above comes to $650000.

  1. Book Value per Share

To determine

Concept Introduction:

Book Value Per Share:

Book Value per share is a simple calculation of Total Shareholders Equity, divided by number of shares outstanding at the end of the year.

Requirement 4

Book Value per Share.

  1. Book Value per Share

Expert Solution
Check Mark

Answer to Problem 1APSA

Book Value per Share is $59.75 per share.

Explanation of Solution

The above solution can be explained as below:

  Book Value Per Share=Total Shareholders EquityTotal No. of Shares Outstanding

  Book Value Per Share=500000+69500020000

  Book Value Per Share=119500020000

  Book Value Per Share= $59.75

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 13 Solutions

Connect Access Card For Fundamental Accounting Principles

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