Question

Mendoza Corporation was organized on January 1, 2020. It is authorized to issue 20,000 shares of 6%, $40 par value preferred stock, and 500,000 shares of no-par common stock with a stated value of $2 per share. The following stock transactions were completed during the first year. Jan. 10   Issued 100,000 shares of common stock for cash at $3 per share. Mar. 1   Issued 10,000 shares of preferred stock for cash at $55 per share. Apr.   1   Issued 25,000 shares of common stock for land. The asking price of the land was $90,000. The company’s estimate of fair value of the land was $75,000. May   1   Issued 75,000 shares of common stock for cash at $4 per share. Aug. 1   Issued 10,000 shares of common stock to attorneys in payment of their bill for $50,000 for services performed in helping the company organize. Sept. 1   Issued 5,000 shares of common stock for cash at $6 per share. Nov. 1   Issued 2,000 shares of preferred stock for cash at $60 per share. Instructions (a) Journalize the transactions (b) Prepare the paid-in capital section of stockholders’ equity at December 31, 2020

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Answer 1

• (a).

  Date	Accounts Title & Explnation	Debit	Credit
  Jan. 10	Cash (100000 * $3)	$300000
  	Common Stock		$200000
  	Paid in capital excess of stated value – Common         Stock		$100000
  March 1	Cash (10000 * $55)	$550000
  	Preferred Stock (10000 * $40)		$400000
  	Paid in capital excess of par value – Preferred         Stock		$150000
  April 1	Land	$75000
  	Common Stock (25000 * $2)		$50000
  	Paid in capital excess of stated value – Common         Stock		$25000
  May 1	Cash (75000 * $4)	$300000
  	Common Stock (75000 * $2)		$150000
  	Paid in capital excess of stated value – Common         Stock		$150000
  Aug. 1	Organizational Expense	$50000
  	Common Stock (10000 * $2)		$20000
  	Paid in capital excess of stated value – Common         Stock		$30000
  Sep. 1	Cash (5000 * $6)	$30000
  	Common Stock (5000 * $2)		$10000
  	Paid in capital excess of stated value – Common         stock		$20000
  Nov. 1	Cash (2000 * $60)	$120000
  	Preferred Stock (2000 * $40)		$80000
  	Paid in capital excess of par value – Preferred         stock		$40000

  (b).

  Preferred Stock
  		March 1	$400000
  		Nov. 1	$80000
  		Balance	$480000

  Common Stock
  		Jan. 10	$200000
  		April 1	$50000
  		May 1	$150000
  		Aug. 1	$20000
  		Sep. 1	$10000
  		Balance	$430000

  Paid-in capital in excess of par value – Preferred Stock
  		March 1	$150000
  		Nov. 1	$40000
  		Balance	$190000

  Paid-in capital in excess of stated value – Common Stock
  		Jan. 10	$100000
  		April 1	$25000
  		May 1	$150000
  		Aug. 1	$30000
  		Sep. 1	$20000
  		Balance	$325000

  (C).

  Mendoza Corporation
  Partial Balance Sheet
  December 31, 2017
  Stockholders’ Equity;
  Paid in capital
  Capital Stock;
  6% Preferred Stock, $40 par value, 20000 shares authorized and 12000 shares issued	$480000
  Common stock, No par value, $2 stated value, 500000 shares authorized and 215000 shares issued	$430000
  Total capital stock		$910000
  Additional paid-in capital;
  Paid-in capital in excess of par value – Preferred Stock	$190000
  Paid-in capital in excess of stated value – Common Stock	$325000
  Total additional paid-in capital		$515000
  Total paid-in capital		$1425000