Question

On January 22, Jefferson County Rocks Inc., a marble contractor, issued for cash 79,500 shares of $45 par common stock at $56, and on February 27, it issued for cash 19,070 shares of preferred stock, $10 par at $11.

Required:

	a. Journalize the entries for January 22 and February 27. Refer to the Chart of Accounts for exact wording of account titles.
	b. What is the total amount invested (total paid-in capital) by all stockholders as of February 27?

Answer 1

a. JOURNAL ENTRIES

DATE	PARTICULARS	DEBIT $	CREDIT $
JANUARY 22	CASH (79500 * 56)	4452000
	COMMON STOCK (79500 * 45)		3577500
	PAID IN CAPITAL IN EXCESS OF PAR VALUE COMMON STOCK (79500 * 11)		874500
FEBRUARY 27	CASH (19070 * 11)	209770
	PREFERRED STOCK (19070 * 10)		190700
	PAID IN CAPITAL IN EXCESS OF PAR VALUE PREFERRED STOCK (19070 * 1)		19070

b. TOTAL PAID IN CAPITAL = TOTAL AMOUNT PAID BY THE SHAREHOLDERS INCLUDING AMOUNT EXCESS OF PAR VALUE. THEREFORE TOTAL PAID IN CAPITAL = $4452000 + $209770 = $4661770.