Question

Below are several activities and events of Cumberland Corporation for its first year in business 2018 October 10 Filed Articles of Incorporation with the Secretary of State. The Articles authorize 10,000 shares of $1 par common stock and 1,000 shares of cumulative, 10%, $50 par value preferred stock. October 15 October 20 October 21 Required: Issue 4,000 shares of common stock for $5 cash per share. Issue 200 shares of preferred stock for $12,000. Issued an additional 3,000 shares of common stock for $18,000 cash. 1. 2. Journalize the transactions listed above. Prepare at October 31st 2018 the Shareholder's Equity section of the balance sheet assuming net income for October was $50,000.

Please show all the work! Thank you!

Answer 1

Journal entries

Date	account and explanation	debit	credit
Oct 10	No entry
Oct 15	Cash (4000*5)	20000
	Common Stock		4000
	Paid in capital in excess of par value-Common Stock		16000
	(To record issue common stock)
Oct 20	Cash	12000
	Preferred stock (200*50)		10000
	Paid in capital in excess of par value-Preferred stock		2000
	(To record issue preferred stock)
Oct 21	Cash	18000
	Common Stock (3000*1)		3000
	Paid in capital in excess of par value-Common Stock		15000
	(To record issue common stock)

Stockholder's equity section :

Paid in capital
Common Stock	7000
Paid in capital in excess of par value-Common Stock	31000
Preferred stock	10000
Paid in capital in excess of par value-Preferred Stock	2000
Total Paid in Capital		50000
Retained earnings		50000
Total Stockholder's equity		100000