Question

Newly formed S&J Iron Corporation has 107,000 shares of $6 par common stock authorized. On March 1, Year 1, S&J Iron issued 12,000 shares of the stock for $13 per share. On May 2, the company issued an additional 16,000 shares for $19 per share. S&J Iron was not affected by other events during Year 1.

Required
a. Record the transactions in a horizontal statements model. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Use NA to indicate that an element was not affected by the event.
  b. Determine the amount S&J Iron would report for common stock on the December 31, Year 1, balance sheet.
c. Determine the amount S&J Iron would report for paid-in capital in excess of par.
d. What is the total amount of capital contributed by the owners?
e. What amount of total assets would S&J Iron report on the December 31, Year 1, balance sheet?
f. Prepare journal entries to record the March 1 and May 2 transactions.

Answer 1

Answer a.

Answer b.

Common Stock = 12,000 * $6 + 16,000 * $6
Common Stock = $168,000

Answer c.

Paid-in Capital in Excess of Par = 12,000 * $7 + 16,000 * $13
Paid-in Capital in Excess of Par = $292,000

Answer d.

Total Capital = Common Stock + Paid-in Capital in Excess of Par
Total Capital = $168,000 + $292,000
Total Capital = $460,000

Answer e.

Total Assets = Cash
Total Assets = $460,000

Answer f.