Question

On February 12, Quality Carpet Inc., a carpet wholesaler, issued for cash 155,000 shares of no-par common stock (with a stated value of $5) at $20, and on August 3, it issued for cash 10,000 shares of $85 par preferred stock at $89.

a. Journalize the entries for February 12 and August 3, assuming that the common stock is to be credited with the stated value.

Answer 1

Journal Entries:

Date	Account Title & Explanation	Debit	Credit
Feb12	Cash Account (155000 x $20)	$3100000
	Common Stock (155000 x $5)		$775000
	Paid in Capital in Excess of Par - common stock		$2325000
	(To record issuance of common stock)
Aug 03	Cash Account (10000 x $89)	$890000
	Preferred Stock (10000 x $85)		$850000
	Paid in capital in Excess of Par- Preferred stock		$40000
	(To Record Issuance of Preferred stock)