Identifying advantages and disadvantages of a corporation
Following is a list of advantages and disadvantages of the corporate form of business. Identify each quality as either an advantage or a disadvantage.
c. Transfer of ownership is easy.
Transfer of ownership is easy is an advantage of a corporation.
A stockholder or shareholder is an individual, organization, or institution that owns at least one stock of a corporation's share that is known as equity of the corporation.
To transfer the ownership of a corporation shareholder needs to sell its allotted shares in the recognized stock exchange and thus it is an easy process of transferring ownership.
Journalizing issuance of stock
Steller Systems completed the following stock issuance transactions:
May 19 Issued 1,700 shares of $3 par value common stock for cash of $10.50 per share.
Jun. 3 Issued 300 shares of $9, no-par preferred stock for $15,000 cash.
11 Received equipment with a market value of $68,000 in exchange for 5,000 shares of the $3 par value common stock.
1. Journalize the transactions. Explanations are not required.
Journalizing issuance of stock and preparing the stockholders’ equity section of the balance sheet
The charter of Evergreen Corporation authorizes the issuance of 900 shares of preferred stock and 1,400 shares of common stock. During a two-month period, Evergreen completed these stock-issuance transactions:
Mar. 23 Issued 230 shares of $3 par value common stock for cash of $15 per share.
Apr. 12 Received inventory with a market value of $27,000 and equipment with a market value of $19,000 for 320 shares of the $3 par value common stock.
17 Issued 900 shares of 5%, $20 par value preferred stock for $20 per share.
2. Prepare the stockholders’ equity section of the Evergreen balance sheet as of April 30, 2018, for the transactions given in this exercise. Retained Earnings has a balance of $73,000 at April 30, 2018
Computing dividends on preferred and common stock and journalizing
The following elements of stockholders’ equity are from the balance sheet of Sneed Marketing Corp. at December 31, 2017:
Preferred Stock—4%, $2 Par Value; 80,000 shares
authorized, 55,000 shares issued and outstanding
Common Stock—$0.10 Par Value; 8,750,000 shares
authorized, 8,000,000 shares issued and outstanding
Sneed paid no preferred dividends in 2017.
2. Record the journal entries for 2018 assuming that Sneed Marketing Corp. declared the dividends on July 1 for stockholders of record on July 15. Sneed paid the dividends on July 31
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