Question

Duple Company Ltd., reported the following stockholders’ equity on its balance sheet at Dec 31, 2017:

Duple Company Ltd. Stockholders’ Equity Dec 31,2017
Paid in Capital
Preferred stock, 10%, ? par, 1,000,000 shares authorized, 100,000 shares issued	$ 2,000,000
Common stock, par value $? per share, 10,000,000 shares authorized, 2,000,000 shares issued and outstanding	4,000,000
Paid-in Capital excess of par - common	20,000,000
Total paid-in capital	26,000,000
Retained earnings	10,600,000
Total stockholder's equity	$36,600,000

Requirements:

1. What is the par value per share of Supper’s preferred stock? (Show Workings)

2. What is the par value per share of Supper’s common stock? (Show Workings)

3. What is the selling per share for the $20,000,000 reported as paid-in capital in excess     of par – common? (Show Workings)

4. Prepare two (2) summary journal entries to record issuance of all the Supper Company Ltd stock for cash. Explanations are not required.

Answer 1

1.Par value per share of supper's preferred stock:

total value / total number of shares issued

=>2,000,000/100,000

=>$20.

2.par value per share of supper's common stock

=>value / shares issued and outstanding

=>4,000,000 / 2,000,000

=>$2.

3.selling price per share = (common stock value + paid in capital in excess of par) / number of shares issued and outstanding

=>(4,000,000+20,000,000) / 2,000,000

=>$12 per share.

4.the following are the journal entries

sno	accounts	debit	credit
1	Cash a/c	2,000,000
	............To Preferred stock a/c		2,000,000
	(to record issuance of preferred stock)
2	cash a/c	24,000,000
	..........To Common stock		4,000,000
	..........To Paid in capital in excess of par - common stock		20,000,000
	(to record issuance of common stock @$12 per share)