Question

Blue Spruce Corporation was organized on January 1, 2020. It is authorized to issue 12,000 shares of 8%, $100 par value preferred stock, and 462,000 shares of no-par common stock with a stated value of $3 per share. The following stock transactions were completed during the first year.
Jan.10 Issued 77,000 shares of common stock for cash at $6 per share.
Mar.1 Issued 5,500 shares of preferred stock for cash at $110 per share.
Apr.1 Issued 25,000 shares of common stock for land. The asking price of the land was $88,000. The fair value of the land was $84,000.
May.1 Issued 76,500 shares of common stock for cash at $5.25 per share.
Aug.1 Issued 12,000 shares of common stock to attorneys in payment of their bill of $44,000 for services performed in helping the company organize.
Sept.1 Issued 12,000 shares of common stock for cash at $7 per share.
Nov.1 Issued 3,000 shares of preferred stock for cash at $112 per share.
Post to the stockholders’ equity accounts.
Prepare the paid-in capital section of stockholders’ equity at December 31, 2020.

Answer 1

Answer:

a. Posting to the Stockholders' Equity Accounts:

Common Stock Account

Date       Account Titles                    Debit           Credit

Jan.10    Cash                                                       $231,000

Apr. 1     Land                                                         $75,000

May 1     Cash                                                      $229,500

Aug. 1    Attorney Fees                                         $36,000

Sep. 1    Cash                                                        $36,000

Dec. 31    Balance                        $607,500

Additional Paid-up Capital - Common Stock Account

Date       Account Titles                    Debit           Credit

Jan.10    Cash                                                       $231,000

Apr. 1     Land                                                          $13,000

May 1     Cash                                                        $172,125

Aug. 1    Attorneys Fees                                          $8,000

Sep. 1    Cash                                                        $48,000

Dec. 31    Balance                        $472,125

Preferred Stock Account

Date       Account Titles                    Debit           Credit

Mar. 1      Cash                                                      $550,000

Nov. 1      Cash                                                      $300,000

Dec. 31    Balance                        $850,000

Additional Paid-up Capital - Preferred Stock

Date       Account Titles                    Debit           Credit

Mar. 1      Cash                                                     $55,000

Nov. 1      Cash                                                     $36,000

Dec. 31    Balance                        $91,000

Paid-in Capital Section of the Stockholders' Equity at December 31, 2020:

202,500 shares of Common Stock at $3 per share    $607,500

8,500 shares of Preferred Stock at $100 per share      850,000

Additional Paid-in Capital:

Common Stock                                                                 472,125

Preferred Stock                                                                  91,000

Total Paid-in Capital                                                 $2,020,625

Explanation:

a) Data and Calculations:

Authorized shares:

8%, $100 par value preferred stock = 12,000 shares

No-par common stock with stated value of $3 per share = 462,000

Common Stock Shares Issued:

Jan.10 Issued 77,000 shares

Apr.1 Issued 25,000 shares

May.1 Issued 76,500 shares

Aug.1 Issued 12,000 shares

Sept.1 Issued 12,000 shares

Total issued 202,500 shares

Preferred Stock Shares Issued:

Mar.1 Issued 5,500 shares

Nov.1 Issued 3,000 shares

Total issued 8,500 shares