Eastport Inc. was organized on June 5, Year 1. It was authorized to issue 300,000 shares of $10 par common stock and 50,000 shares of 5 percent cumulative class A preferred stock. The class A stock had a stated value of $50 per share. The following stock transactions pertain to Eastport Inc.:

Issued 15,000 shares of common stock for $12 per share.

Issued 5,000 shares of the class A preferred stock for $51 per share.

Issued 60,000 shares of common stock for $15 per share.

Required:

a. Prepare general journal entries for these transactions.

b. Prepare the stockholders' equity section of the balance sheet immediately after these transactions.

Stockholders' equity
Total stockholders' equity

a.

Dr. Cash                                                                  $180,000

Cr. Common Stock                                                 $150,000

Cr. Add-in-Capital excess of par Common stock $30,000

Dr. Cash                                                                   $255,000

Cr. Preferred Stock                                                 $250,000

Cr. Add-in-Capital excess of par Preferred stock $5,000

Dr. Cash                                                                  $900,000

Cr. Common Stock                                                 $600,000

Cr. Add-in-Capital excess of par Common stock $300,000

Stockholders' equity

Common Stock (150,000 + 600,000)                  $750,000

Preferred Stock                                                     $250,000

Add-in-Capital excess of par Common stock     $330,000

($30,000 + $300,000)

Add-in-Capital excess of par Preferred stock     $5,000      

Total stockholders' equity                                   $1,335,000

Explanation:

a.

Cash receipt = 15,000 x 12 = $180,000

Common stock = 15,000 x 10 = $150,000

Add-in-Capital excess of par Common stock = $180,000 - $150,000 = $30,000

Cash receipt = 5,000 x 51 = $255,000

Common stock = 5,000 x 50 = $250,000

Add-in-Capital excess of par Preferred stock = $255,000 - $250,000 = $5,000

Cash receipt = 60,000 x 15 = $900,000

Common stock = 60,000 x 10 = $600,000

Add-in-Capital excess of par Common stock = $900,000 - $600,000 = $300,000

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