Accounting for Par Value Stock

Example: McCord Corporation is Authorized to issue 50,000 shares of $5 par, 8% Cummulative Pr

1 Cash Dr $150,000
Preferred Stock Cr $150000
(To record issuance of 30,000 shares of $5 par, 8% preferred at $5 per share)

2 Cash Dr $180,000
Common Stock Cr 100,000
Paid in capital in excess of par Cr 80,000
(To record issuance of 10,000 shares of $10 par common at $18 per share)

Accounting for No Par Value Stock

Example: Canton Corporation is Authorized to issue 20,000 shares of no-par, 8% common stock.
1 Cash Dr $180,000
Common Stock Cr 180,000
(To record issuance of 10,000 shares of No-par common at $18 per share)

Accounting for Stated Value Stock

To comply with State Law, Canton's board of Directors has assigned a $10 Stated value to each sh
2 Cash Dr $180,000
Common Stock Cr 100,000
Paid in capital in excess of par Cr 80,000
(To record issuance of 10,000 shares of $10 par common at $18 per share)

Q.15-3 Prepare journal entries to record the issuance of 100,000 shares of common stoc
a. Lackson Corporation has common stock with a par value of $1 per share.
b. Royal Corporation has no par common with a stated value of $5 per share
c. French Corporation has no par common, no stated value has been assigned
ar, 8% Cummulative Preferrred Stock and 20,000 share of $10 Par common. It is also assume that The corp

per share)

ar, 8% common stock. If 10,000 shares are at issued at $18 Per share. The required entry are;

Stated value to each shares. The issuance of 10,000 share would now be recorded as follows;

shares of common stock at $20 per share for each of the following independent cases:
e of $1 per share.
alue of $5 per share
e has been assigned
o assume that The corporation has issued 30,000 shares of Preferred at Par and 10,000 shares of common

entry are;

as follows;
000 shares of common at $18. The required entries are;
Stock Subscriptions
Example: Investors subscribed to 1,000 shares of Glover Corporation $5 par common stock at $22

1 Subscription Receivable: CS Dr $ 22,000

Common Stock Subscribed Cr $5,000
Paid in Capital in excess of Par Cr 17,000
(To record Subscriptions to 1,000 shares of $5 Par Common at $22 per share)

Assume investor subscribing to 750 shares paid in full. Glover would therefore issue the stock and

1 Cash Dr $16500
Subscription Receivable: CS Cr $16500

(750 shares * $22= $16500)

2 Common Stock Subscribed Dr $3750

Common Stock Cr $3750
(To record the issuance of 750 shares under subscription agreements)
Assume that subscribers pay 40% of their 250shares balance due, no additional shares would be

3 Cash Dr $ 22,00
Subsrcription Receivable: CS Cr$22,00
To record partial payment on subscriptions for 250 shares (250 shares *$22*40%)

Q. 15-5 Investor recently subscribed to 5,000 shares of B&J Travel's $1 par value commo
a. Prepare journal entries to record:
1. the subscriptions to investors.
2. the reciept of cash from subscribers
3. The issuance of shares
b. Determine the year end balance in common stock subscribed account
c. Determine the year end balance in common stock subscription receivable acco
ar common stock at $22 per share. The journal entry that would be made.
100 shares500 shares1000shares

2 per share)

fore issue the stock and record the following entries;

tional shares would be issued. Issuance occur only whenfull payment is made; thus,the required entry wou

ares *$22*40%)

l's $1 par value common stock at $10 per share. During the year, the company received 80% of the balance

cribed account
cription receivable account.
,the required entry would be:

ved 80% of the balance due, which resulted in the issuance of 4,000 shares of stock.
cash dr 1620000
Common stock cr 600000
paid in capital Cr 1020000

60000
Average price =1620000/60000
 Issuing Stocks for Assets Other Than Cash
Example: Fuqua Industries is a samll family run business in LA. Fuqua's attorney has agreed to acc

1 Organization Cost Dr $ 850

Common Stock Cr $200
Paid in Capital in excess of Par Cr $650
(To record issuance of common stock in exchange for legal services)

P13-1A Alexia Corporation was organized on January 1, 2012. It is authorized to issue 10,000
shares of 8%, $100 par value preferred stock, and 500,000 shares of no-par common stoc
stated value of $2 per share. The following stock transactions were completed during the
Jan. 10 Issued 80,000 shares of common stock for cash at $4 per share.
Mar. 1 Issued 5,000 shares of preferred stock for cash at $105 per share.
Apr. 1 Issued 24,000 shares of common stock for land. The asking price of the land was
$90,000. The fair value of the land was $85,000.
May 1 Issued 80,000 shares of common stock for cash at $4.50 per share.
Aug. 1 Issued 10,000 shares of common stock to attorneys in payment of their bill of $30,000
for services provided in helping the company organize.
Sept. 1 Issued 10,000 shares of common stock for cash at $5 per share.
Nov. 1 Issued 1,000 shares of preferred stock for cash at $109 per share.
Instructions
(a) Journalize the transactions.
(b) Prepare the paid-in capital section of stockholders’ equity at December 31, 2012.
orney has agreed to accept 40shares of $5 par common for $850 of legal work performed in organizing the

Land Dr
common stock cr

ized to issue 10,000

of no-par common stock with a
e completed during the first year.
Cash Dr 320,000
Common stock Cr 160000
paid in capital in excess par cr 160000

Land 85000
ir bill of $30,000 cs 48000
PIC 37000

ecember 31, 2012.

ormed in organizing the corporation- journal entry follows:
 Dividend Preference
Flora Inc., has 20,000 shares of 10%, $5 par, Cumulative preferred stock and 50,000 shares of $1 p

Year Total Dividends Distributed Annual Preferred Requirement

1 $4,000 $6,000
2 $6,500 $6,000
3 $7,500 $6,000
4 $9,000 $6,000

Formula for Annual Preferred Requirement (No. Preferred shares * Par value* Cu

15-2 Johnson Brothers, Inc., ha two

b. calculate the dividends that would have been paid to the common stockholde

6000
rred stock and 50,000 shares of $1 per common. Dividend distributions for the past four years are listed in

Dividends in Arrears Dividends For Preferred Dividend for Common

2000 $4,000 $0
$1,500 $6,500 0
$0 $7,500 0
0 $6,000 $3,000

No. Preferred shares * Par value* Cumulative %)

10000

een paid to the common stockholders in 19x4 and 19x5 if the preferred stock had been noncumulative.

19x4=500
19x5=1500
ur years are listed in the second colunm of the following table

n noncumulative.
 Shareholders' Equity
Capital Stock
Cumulative 8% Preferred Stock, $5 Par, 50,000 shares authorized, 30,000 shares issued and outstanding
Common stock , $10 par, 20,000 shares authorized, 10,000 shares issued and outstanding
Paid in Capital in excess of Par: CS
Total Paid in Capital
Retained Earnings
Total Shareholders' Equity

Two Classes of Stock

Information Reveals the dividends on the preferred stock are $4,000 in arrears at year end.

Shareholders' Equity
Capital Stock
Cumulative 5% Preferred Stock, $100 Par, callable at $110, 1,000 shares authorized, 400 shares issued and outstand
Common stock , $1 par, 100,000 shares authorized, 30,000 shares issued and outstanding
Additional Paid in Capital
Paid in Capital in excess of Par: CS
Paid in Capital in excess of Par: PS
Total Paid in Capital
Retained Earnings
Total Shareholders' Equity

The allocation of Orleans stockholders' equity follows

Total stockholders' equity $870,000

Allocatted to Preferred stock
Call Value: 400 Shares * 110= $44,000
Dividends in arrears $4,000 $48,000
Allocatted to common stock $822,000

The book value per share for each class of stock can now be calculated in the following m

Preferred Stock: $48,000/400 Shares= $120,000 per Share

Common Stock: $822,000/30,000 Shares= $ 27.40 per share

Q.15-11 The Blackford Corporation had the following stackholders' equity fo

Shareholders' Equity
Capital Stock
Preferred Stock, $100 Par, 8% cumulative, callable at $105, 10,000 shares authorized, 3,00
Common stock , $1 par, 1,000,000 shares authorized, 600,000 shares issued and outstand
Additional Paid in Capital
Paid in Capital in excess of Par: PS
Paid in Capital in excess of Par: CS
Tol Paid in Capital
Retained Earnings
Total Shareholders' Equity

a. Determine Blackford's book value per share for 19x1

b. Compute Blackford's book value per share of both the preferred and the co

c. Compute Book value for both stock if 2 year dividends in arrears

nd outstanding $150,000
g $100,000 $250,000 $250,000
$80,000
$330,000
$240,000
$570,000

rs at year end.

shares issued and outstanding $40,000

g $30,000 $70,000

$200,000
5,000 $ 205,000
$275,000
$595,000
$870,000

Step1 Allocated to preferred stock=(No. of PS share*Callable value )+Dividend

48000
step 2 Allocted to Common stock=Total shareholders' equity -Amount allocated preferred s

822000
Step 3 Book value of PS= Allocated to preferred stock/Total no . PS
ed in the following manner 120
Step 4 book value of CS= Allocated to common stock/Total no . CS
27.4

holders' equity for 19x2 and 19x1:

19x2 19x1
00 shares authorized, 3,000 shares issued and outstanding $300,000 0
hares issued and outstanding $600,000 600,000

0
14,400,000
$
$13,809,000
12,000,000
$29,1390,000
27,000,000

preferred and the common stock in 19x2. There are no dividend in arrears.

n arrears
Callable value )+Dividend in arrears

-Amount allocated preferred stock