Eastport Inc. was organized on June 5, 2018. It was authorized to issue 380,000 shares of $11 par common stock and 25,000 shares of 5 percent cumulative class A preferred stock. The class A stock had a stated value of $25 per share.

The following stock transactions pertain to Eastport Inc.:

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

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

3. 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.

Dr cash $180,000

Cr common stock $165,000

Cr paid-in capital in excess of par value-common stock $15,000

Dr cash $255,000

Cr preferred stock $125,000

Cr paid-in capital in excess of par - preferred stock $130,000

Dr cash $900,000

Cr common stock $660,000

Cr paid-in capital in excess of par value-common stock $240,000

Stockholders' equity

Common stock $11 par, 380,000 authorized, 75,000 issued ($165,000+$660,000) $825,000

Preferred stock $25 par, 25,000 authorized, 5,000 issued $125,000

Total par value $950,000

paid-in capital in excess of par value-common stock

($15,000+$240,000) $255,000

paid-in capital in excess of par - preferred stock $130,000

Total stockholders' equity $ 1,210,000

Explanation:

The issue of 15,000 shares of common stock for $12 each means that cash proceeds of $180,000 (15,000*$12) which is debited to cash and common stock is credited with $165,000 (15,000*$11) while the remaining $15,000 is credited to paid-in capital in excess of par value-common stock

The issue of 5,000 shares of preferred stock for $51 each means that cash proceeds of $ 255,000 (5,000*$51) which is debited to cash and preferred stock is credited with $125,000 (5,000*$25) while the remaining $130,000 is credited to paid-in capital in excess of par value-preferred stock

The issue of 60,000 shares of common stock for $15 each means that cash proceeds of $900,000 (60,000*$15) which is debited to cash and common stock is credited with $660,000 (60,000*$11) while the remaining $ 240,000 is credited to paid-in capital in excess of par value-common stock