Chapter 2 Exercises 1. Issuance of stock Prepare journal entries to record the issuance of 100,000 shares of common stock at $20 per share for each of the following independent cases: a. Jackson Corporation has common stock with a par value of $1 per share. b. Royal Corporation has no-par common with a stated value of $5 per share. c. French Corporation has no-par common; no stated value has been assigned. 2. Stock subscriptions: Journal entries Investors recently subscribed to 5,000 shares of B&J Travel's $1 par-value common stock at $10 per share. During the year, the company received 80% of the balances due, which resulted in the issuance of 4,000 shares of stock. a. Prepare journal entries to record 1) the subscriptions to investors. 2) the receipt of cash from subscribers. 3) the issuance of shares. b. Determine the year-end balance in the Common Stock Subscribed account. c. Determine the year-end balance in the Common Stock Subscriptions Receivable account. 3. Analysis of stockholders' equity Star Corporation issued both common and preferred stock during 20X6. The stockholders' equity sections of the company's balance sheets at the end of 20X6 and 20X5 follow: 20X6 20X5 Preferred stock, $100 par value, 10% $ 580,000 $ 500,000 Common stock, $10 par value 2,350,000 1,750,000 Paid-in capital in excess of par value Preferred 24,000 — Common 4,620,000 3,600,000 Retained earnings 8,470,000 6,920,000 Total stockholders' equity $16,044,000 $12,770,000 a. Compute the number of preferred shares that were issued during 20X6. b. Calculate the average issue price of the common stock sold in 20X6. c. By what amount did the company's paid-in capital increase during 20X6? d. Did Star's total legal capital increase or decrease during 20X6? By what amount? 4. Preparation of stockholders' equity section The following data relate to LeMaster Corporation as of December 31, 20XX, the close of the current accounting period: . Preferred stock—The company has 1,000 shares of $50 par-value cumulative preferred stock authorized. The stock pays a 10% dividend; to date, 400 shares have been issued at $55 per share. . Common stock—A total of 25,000 shares of $1 stated-value common stock is authorized. To date, 10,000 shares have been issued at $10 per share, and an additional 3,000 shares have been subscribed to at $15 per share. Assuming a retained earnings balance of $177,000, prepare the stockholders' equity section of LeMaster's December 31, 20XX balance sheet. · Bond premium: Straight-line amortization Castillo Company issued $200,000 of 10% 4-year bonds on January 1, 20X1 for $216,000. The bonds pay interest semiannually on June 30 and December 31. e. Prepare the required journal entry to record the bond issuance on January 1, 20X1. e. Prepare entries to record the interest payment and premium amortization on June 30 and December 31, 20X1. Castillo uses the straight-line method of amortization. e. Compute 20X1 bond interest expense. e. Present th ...