Question

Newly formed S&J Iron Corporation has 83,000 shares of $5 par common stock authorized. On March 1, 2016, S&J Iron issued 10,000 shares of the stock for $10 per share. On May 2 the company issued an additional 21,500 shares for $21 per share. S&J Iron was not affected by other events during 2016.

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, 2016, 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, 2016, balance sheet?

      

f.	Prepare journal entries to record the March 1 and May 2 transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field)

      

Answer 1

a)

Event	Asset	=	Liabilities	+	stockholders equity		Cash flow
	cash				common stock	paid in capitall
march1	10000*10=100000				10000*5=50000	50000	FA
may2	21500*21=451500				21500*5= 107500	344000	FA
Total	551500				157500	394000

B)COmmon stock : 157500

c)paid in capital:394000

d)otal amount of capital contributed by the owners = 157500+394000=551500

e)Total asset = 551500

f)

Date	Account	debit	credit
march 1	cash	100000
	common stock		50000
	additional paid in capital		50000
may 2	cash	451500
	common stock		157500
	additional paid in capital		344000