Answer:
A) Journal Entries are in the explanation section
B) Total amount invested by stockholders - $4,268,440
Explanation:
Requirement - A)
Date Account Titles & Explanation Debit ($) Credit ($)
For common stock -
Jan-22 Cash (77,000 stocks*$53) 4,081,000
Common stock
($50 par value, 77,000 shares) 3,850,000
Paid-in Capital in excess of par value
($53 - $50 = $3; 77,000 shares) 231,000
As the market value of a stock price is more than par value, there will be additional paid-in capital of $3 per stock. The above journal is made to record the issuance of common stock.
For preferred stock -
Feb-27 Cash (17,040 stocks*$11) 187,440
Preferred stock
($10 par value, 17,040 shares) 170,400
Paid-in Capital in excess of par value - Preferred stock
($11 - $10 = $1; 17,040 shares) 17,040
As the market value of the preferred stock is more than par value, there will be additional paid-in capital of $1 per stock. The above journal is made to record the issuance of preferred stock.
Requirement - B)
Particulars Amount ($)
Common Stock ($50 x 77,000) 3,850,000
Paid-in Capital in excess of par value-Common Stock 231,000
[($53-$50)*77,000]
Preferred stock ($10*17,040) 170,400
Paid-in Capital in excess of par value - Preferred stock 17,040
[($11 - $10)*17,040 shares]
Total invested amount $4,268,440
Therefore, the shareholders invested the par value as well as additional value in order to continue the company's operation.
