Garcia Corporation recently hired a new accountant with extensive experience in accounting for partnerships. Because of the pressure of the new job, the accountant was unable to review what he had learned earlier about corporation accounting. During the first month, he made the following entries for the corporation’s capital stock.
Solution
Answer: Issued 7,800 shares of $11 par value common stock at $14 per share:
2 May Cash A/C Dr. $109200
Common stock A/C $85800
Paid-in Capital in Excess of Par Value--Common Stock A/C $23400
Issued 12,360 shares of $18 par value preferred stock at $56 per share:
10 May Cash A/C Dr. $692160
Preferred Stock A/C $222480
Paid-in Capital in Excess of Par Value—Preferred Stock A/C $469680
Purchased 790 shares of common stock for the treasury at $10 per share:
15 May Treasury Stock A/C Dr. $7900
Cash A/C $7900
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Garcia Corporation recently hired a new accountant with extensive expe.docx
1. Garcia Corporation recently hired a new accountant with extensive experience in accounting for
partnerships. Because of the pressure of the new job, the accountant was unable to review what
he had learned earlier about corporation accounting. During the first month, he made the
following entries for the corporation’s capital stock.
May
2
Cash 109,200
Capital Stock 109,200
(Issued 7,800 shares of $11 par value common stock at $14 per share)
10 Cash 692,160
Capital Stock 692,160
(Issued 12,360 shares of $18 par value preferred stock at $56 per
share)
15 Capital Stock 7,900
Cash 7,900
(Purchased 790 shares of common stock for the treasury at $10 per
share)
Solution
Answer: Issued 7,800 shares of $11 par value common stock at $14 per share:
2 May Cash A/C Dr. $109200
Common stock A/C $85800
Paid-in Capital in Excess of Par Value--Common Stock A/C $23400
Issued 12,360 shares of $18 par value preferred stock at $56 per share:
10 May Cash A/C Dr. $692160
Preferred Stock A/C $222480
2. Paid-in Capital in Excess of Par Value—Preferred Stock A/C $469680
Purchased 790 shares of common stock for the treasury at $10 per share:
15 May Treasury Stock A/C Dr. $7900
Cash A/C $7900
