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P 11-1A Oxygen Co. & P 11-1B Nilson Company - Stockholders'

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Problem 11-1A
Stockholders' equity transactions and analysis

Oxygen Co. is incorporated at the beginning of this year and engages in a number of transactions. The following journal entries impacted its stockholders' equity during its first year of operations.

Required
Explain the transaction(s) underlying each journal entry (a) through (d).
1. How many shares of common stock are outstanding at year-end?
2. What is the amount of minimum legal capital (based on par value) at year-end?
3. What is the total paid-in capital at year-end?
4. What is the book value per share of the common stock at year-end if total paid-in capital plus retained earnings equals $347,500?
Check
(2) 10,000 shares
(3) $250,000
(4) $325,000

Problem 11-1B
Stockholders' equity transactions and analysis
Nilson Company is incorporated at the beginning of this year and engages in a number of transactions. The following journal entries impacted its stockholders' equity during its first year of operations.

Required
1. Explain the transaction(s) underlying each journal entry (a) through (d).
2. How many shares of common stock are outstanding at year-end?
3. What is the amount of minimum legal capital (based on par value) at year-end?
4. What is the total paid-in capital at year-end?
5. What is the book value per share of the common stock at year-end if total paid-in capital plus retained earnings equals $141,500?
Check
(2) 3,000 shares
(3) $3,000
(4) $130,000

Attachments

Solution Preview

Problem 11-1A Oxygen Co.
Explain the transaction(s) underlying each journal entry (a) through (d).
(a) Issue stock for cash at above par value.
(b) Issue stock in exchange for set up and organizational costs.
(c ) Issue stock and assume debt in exchange for Cash, Accounts Receivable and Building.
(d) Same as (a) - issue stock for cash at above par value.

How many shares of common stock are outstanding at year-end?
The amount put in the par account in the JEs give, is the par x number of shares (this is a requirement for booking the issue). The amount over the par goes into the "excess of par" account.
If you got $60,000 for 1,500 shares, that would be $40 per share. On this problem, $25 of this would go in the par account and $40 - $25 = $15 per share would go in the "excess of par" account. ...

Solution Summary

Your tutorial shows you the steps to figuring out the minimum capital, the price per share, the number of shares and the book value per share.

$2.19