Explore BrainMass

Explore BrainMass

    Scizzory Corporation

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Need help with how to prepare these 2 problems.

    EXERCISES 13-3
    Prepare journal entries to record the following four separate issuances of stock:
    1. Two thousand shares of no-par common stock are issued to the corporation's promoters in exchange
    for their efforts, estimated to be worth $30,000. The stock has no stated value.
    2. Two thousand shares of no-par common stock are issued to the corporation's promoters in exchange
    for their efforts, estimated to be worth $30,000. The stock has a $1 per share stated value.
    3. Four thousand shares of $10 par value common stock are issued for $70,000 cash.
    4. One thousand shares of $100 par value preferred stock are issued for $120,000 cash.

    EXERCISES 13-7

    On June 30, 2005, Scizzory Corporation's common stock is priced at $31 per share before any stock dividend or split, and the stockholders' equity section of its balance sheet appears as follows:

    Common stock?$10 par value, 60,000 shares
    authorized, 25,000 shares issued and outstanding . . . . . . . . . . . . $250,000
    Contributed capital in excess of par value, common stock . . . . . . . 100,000
    Total contributed capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350,000
    Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330,000
    Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $680,000

    1. Assume that the company declares and immediately distributes a 100% stock dividend. This event is recorded by capitalizing retained earnings equal to the stock's par value. Answer these questions about stockholders' equity as it exists after issuing the new shares:
    a. What is the retained earnings balance?
    b. What is the amount of total stockholders' equity?
    c. How many shares are outstanding?
    2. Assume that the company implements a 2-for-1 stock split instead of the stock dividend in part 1.
    Answer these questions about stockholders' equity as it exists after issuing the new shares:
    a. What is the retained earnings balance?
    b. What is the amount of total stockholders' equity?
    c. How many shares are outstanding?
    3. Explain the difference, if any, to a stockholder from receiving new shares distributed under a large
    stock dividend versus a stock split.

    Check (1b) $680,000
    (2a) $330,000

    © BrainMass Inc. brainmass.com March 4, 2021, 8:21 pm ad1c9bdddf
    https://brainmass.com/business/the-accounting-cycle/scizzory-corporation-162496

    Attachments

    Solution Preview

    EXERCISES 13-3
    Prepare journal entries to record the following four separate issuances of stock:
    1. Two thousand shares of no-par common stock are issued to the corporation's promoters in exchange for their efforts, estimated to be worth $30,000. The stock has no stated value.

    1. Organization Expenses 30,000
    Common Stock, No-Par Value 30,000
    Issued stock to promoters.

    2. Two thousand shares of no-par common stock are issued to the corporation's promoters in exchange for their efforts, estimated to be worth $30,000. The stock has a $1 per share stated value.

    2. Organization Expenses 30,000
    Common Stock, $1 Stated Value 2,000
    Contributed Capital in Excess of Stated
    Value, Common Stock
    28,000
    Issued stock to promoters.

    3. Four thousand shares of $10 par value common stock are issued for $70,000 cash.

    3. Cash 70,000
    Common Stock, $10 Par Value 40,000
    Contributed Capital in Excess of Par
    Value, Common Stock
    30,000
    Issued common stock for cash.

    4. One thousand shares of $100 par value ...

    Solution Summary

    This solution is to prepare journal entries to record the four separate issuances of stock and prepare the retained earnings balance and total stockholders' equity for Scizzory Corporation.

    $2.49

    ADVERTISEMENT