Stock Issuance

Horace Company had the following transactions during 2017, its first year of business.

Required:

1. Identify and analyze the effect of each transaction.

a. Issued 4,400 shares of $5 par common stock for cash at $15 per share.

Activity
Accounts
Statement(s)

How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.

Balance Sheet

Income Statement

Stockholders'

Net

Assets

=

Liabilities

+

Equity

Revenues

Expenses

=

Income

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b. Issued 7,200 shares of common stock on May 1 to acquire a factory building from Barkley Company. Barkley had acquired the building in 2013 at a price of $150,000. Horace estimated that the building was worth $175,000 on May 1, 2017.

Activity
Accounts
Statement(s)

How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.

Balance Sheet

Income Statement

Stockholders'

Net

Assets

=

Liabilities

+

Equity

Revenues

Expenses

=

Income

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c. Issued 1,500 shares of stock on June 1 to acquire a patent. The accountant has been unable to estimate the value of the patent but has determined that Horace's common stock was selling at $25 per share on June 1.

Activity
Accounts
Statement(s)

How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.

Balance Sheet

Income Statement

Stockholders'

Net

Assets

=

Liabilities

+

Equity

Revenues

Expenses

=

Income

2. Determine the balance sheet amounts for common stock and additional paid-in capital.

Common stock
Additional paid-in capital
Total contributed capital