On August 5, Synthetic Carpet Inc., a carpet wholesaler, issued for cash 500,000 shares of no-par common stock (with a stated value of $1)

On August 5, Synthetic Carpet Inc., a carpet wholesaler, issued for cash 500,000 shares of no-par common stock (with a stated value of $1) at $3, and on December 17, it issued for cash 5,000 shares of preferred stock, $180 par at $200.

a. Journalize the entries for August 5 and December 17, assuming that the common stock is to be credited with the stated value.
b. What is the total amount invested (total paid-in capital) by all stockholders as of December 17?


Answer:












a. Aug. 5 Cash (500,000 shares × $3) 1,500,000
Common Stock (500,000 shares × $1) 500,000
Paid-In Capital in Excess of Stated Value—
Common Stock [500,000 shares × ($3 – $1)] 1,000,000
Dec. 17 Cash (5,000 shares × $200) 1,000,000
Preferred Stock (5,000 shares × $180) 900,000
Paid-In Capital in Excess of Par—
Preferred Stock [5,000 shares × ($200 – $180)] 100,000
b. $2,500,000 ($1,500,000 + $1,000,000)