18
Corporations:
1. The articles of incorporation are submitted to the state in applying for a charter. A
charter is a document issued to a corporation by a state that includes the certificate
2. Stockholders elect the board of directors.
4. Stockholders’ Equity is made up of Paid-in Capital and Retained Earnings; Paid-in
5. The charter of the corporation indicates the maximum amount of shares of each type
6. Preemptive right is the right to maintain a proportionate ownership interest in the
company.
7. Legal capital: Amount that a corporation must retain in the business for protection of
creditors.
9. Debit, contra-stockholders’ equity.
10. If the proceeds of a sale of stock are greater than par value it is recorded in the Paid
Value.
12. The Organization Expense account records the costs incurred to get an organization
Copyright © 2016 Pearson Education, Inc.
18-2
13. Common Stock Subscribed represents unissued stock that is not issued until the full
subscription price is received.
14. The question in this case is whether Avan Corporation should avoid reporting its
SOLUTIONS TO CONCEPT CHECKS
1.
$7,500
Capital Stock
+14,900
Retained Earnings
$22,400
Stockholders’ Equity
3. Date Accounts Dr. Cr.
Jan. 12
Cash
33,600
Common stock
33,600
Oct. 21
Cash
7,200
Common stock
1,800
Paid-In Capital in Excess of Par Value-Common
5,400
Nov. 29
Cash
5,400
Common stock
4,400
Paid-In Capital in Excess of Stated Value-Common
1,000
Dec. 22
Organization Expense
7,000
Common stock
6,900
Paid-In Capital in Excess of Par Value-Common
100
4.
Preferred
Common
Dividend based on 13% of par value
$ 44,300
$ 96,720
Allocate remainder of dividend based on par value
16,956
36,994
Total
$ 61,286
$ 133,714
5.
Date Accounts Dr. Cr.
Jan. 1 Subscriptions Receivable-Common Stock 49,200
Common Stock Subscribed
32,400
Paid in Capital in Excess of Par Value-
Common
16,800
Mar. 31
Cash
24,600
Subscriptions Receivable-Common Stock
24,600
June 30
Cash
24,600
Subscriptions Receivable-Common Stock
24,600
June 30
Common Stock Subscribed
32,400
Common Stock
32,400
SOLUTIONS TO SET A EXERCISES
18A-1.
(a) Jul.
20
Cash
50
4
0
0
00
Common Stock
44
8
0
0
00
Paid-in Capital in Excess of Par Value-Common
5
6
0
0
00
(b) Jul.
20
Cash
50
4
0
0
00
Common Stock
50
4
0
0
00
(c) Jul.
20
Cash
50
4
0
0
00
Common Stock
39
2
0
0
00
Paid-in Capital in Excess of Stated Value-Common
11
2
0
0
00
18A-2.
Jul.
10
Equipment
326
0
0
0
00
Common Stock
228
8
0
0
00
Paid-in Capital in Excess of Par Value-Common
97
2
0
0
00
18A-3.
Year
Dividend to Preferred Stock
Dividend to Common Stock
1
0
0
2
$33,000
0
3
$62,040
$26,960
18A-4.
Jan.
1
Subscriptions Receivable-Common Stock
88
3
5
0
00
Common Stock Subscribed
50
3
5
0
00
Paid-in Capital in Excess of Par Value-Common
38
0
0
0
00
Jul.
1
Cash
44
1
7
5
00
Subscriptions Receivable-Common Stock
44
1
7
5
00
Dec.
31
Cash
44
1
7
5
00
Subscriptions Receivable–Common Stock
44
1
7
5
00
31
Common Stock Subscribed
50
3
5
0
00
Common Stock
50
3
5
0
00
EXERCISES (CONTINUED)
18A-5.
PETERSON CORPORATION
Stockholders’ Equity
Paid-in Capital
Common Stock, No Par Value, Stated Value
$15 per Share, Authorized 36,000 Shares,
5,600 Shares Issued and Outstanding
$84
0
0
0
00
Paid-in-Capital in Excess of Stated
Value-Common
112
0
0
0
00
Total Paid–in Capital
196
0
0
0
00
Retained Earnings
55
0
0
0
00
Total Stockholders’ Equity
$251
0
0
0
00
SOLUTIONS TO SET B EXERCISES
18B-1.
(a) Jul.
20
Cash
102
0
0
0
00
Common Stock
72
0
0
0
00
Paid-in Capital in Excess of Par Value-Common
30
0
0
0
00
(b) Jul.
20
Cash
102
0
0
0
00
Common Stock
102
0
0
0
00
(c) Jul.
20
Cash
102
0
0
0
00
Common Stock
24
0
0
0
00
Paid-in Capital in Excess of Stated Value-Common
78
0
0
0
00
18B-2.
Jul.
10
Equipment
329
0
0
0
00
Common Stock
278
1
0
0
00
Paid-in Capital in Excess of Par Value-Common
50
9
0
0
00
18B-3.
Year
Dividend to Preferred Stock
Dividend to Common Stock
1
0
0
2
$26,000
0
3
$44,296
$45,704
18B-4.
Jan.
1
Subscriptions Receivable-Common Stock
94
7
6
0
00
Common Stock Subscribed
53
5
6
0
00
Paid-in Capital in Excess of Par Value-Common
41
2
0
0
00
Jul.
1
Cash
47
3
8
0
00
Subscriptions Receivable-Common Stock
47
3
8
0
00
Dec.
31
Cash
47
3
8
0
00
Subscriptions Receivable-Common Stock
47
3
8
0
00
31
Common Stock Subscribed
53
5
6
0
00
Common Stock
53
5
6
0
00
EXERCISES (CONTINUED)
18B-5.
MARKET CORPORATION
Stockholders’ Equity
Paid-in Capital
Common Stock, No Par Value, Stated Value
$23 per Share, Authorized 35,000 Shares,
5,700 Shares Issued and Outstanding
$131
1
0
0
00
Paid-in-Capital in Excess of Stated
Value-Common
57
0
0
0
00
Total Paid-in Capital
188
1
0
0
00
Retained Earnings
56
0
0
0
00
Total Stockholders’ Equity
$244
1
0
0
00
Copyright © 2016 Pearson Education, Inc.
18-9
SOLUTIONS TO SET A PROBLEMS
PROBLEM 18A-1
(1)
AKEBONO CORPORATION
GENERAL JOURNAL
PAGE 3
Date
201X
Account Titles and Description
PR
Dr.
Cr.
Jun.
1
Cash
290
0
0
0
00
Preferred Stock
310
278
4
0
0
00
Paid-in Capital in Excess of Par Value-Preferred
311
11
6
0
0
00
2
Cash
325
6
0
0
00
Common Stock
312
199
8
0
0
00
Paid-in Capital in Excess of Par Value-Common
313
125
8
0
0
00
15
Cash
323
4
0
0
00
Common Stock
312
207
9
0
0
00
Paid-in Capital in Excess of Par Value-Common
313
115
5
0
0
00
Jul.
2
Cash
572
4
0
0
00
Preferred Stock
310
508
8
0
0
00
Paid-in Capital in Excess of Par Value-Preferred
311
63
6
0
0
00
18
Building
63
0
0
0
00
Land
50
0
0
0
00
Common Stock
312
54
0
0
0
00
Paid-in Capital in Excess of Par Value-Common
313
59
0
0
0
00
PROBLEM 18A-1 (CONTINUED)
PREFERRED STOCK
ACCOUNT NO. 310
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
Jun.
1
Balance
√
576
0
0
0
00
1
GJ3
278
4
0
0
00
854
4
0
0
00
Jul.
2
GJ3
508
8
0
0
00
1,363
2
0
0
00
PAID-IN CAPITAL IN EXCESS OF PAR-PREFERRED
ACCOUNT NO. 311
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
Jun.
1
Balance
√
105
0
0
0
00
1
GJ3
11
6
0
0
00
116
6
0
0
00
Jul.
2
GJ3
63
6
0
0
00
180
2
0
0
00
COMMON STOCK
ACCOUNT NO. 312
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
Jun.
1
Balance
√
648
0
0
0
00
2
GJ3
199
8
0
0
00
847
8
0
0
00
15
GJ3
207
9
0
0
00
1,055
7
0
0
00
Jul.
18
GJ3
54
0
0
0
00
1,109
7
0
0
00
PAID-IN CAPITAL IN EXCESS OF PAR-COMMON
ACCOUNT NO. 313
Date
201X
Explanation
Post
Ref.
Debit
Credit
Balance
Debit
Credit
Jun.
1
Balance
√
160
0
0
0
00
2
GJ3
125
8
0
0
00
285
8
0
0
00
15
GJ3
115
5
0
0
00
401
3
0
0
00
Jul.
18
GJ3
59
0
0
0
00
460
3
0
0
00