This needs to be 2-3 pages of original work. Assignment is below:
You will provide the journal entry to record issuing of common stock shares by a corporation, record issuing of cumulative preferred stock, and record a declaration of stock split.
During 2013, Company A has the following transactions involving its common and preferred stock:
- Issued 20,000 shares of $8 par common stock for $26 a share; brings total shares outstanding to 50,000 shares
- Issued 6,000 shares of $100 par, 6%, cumulative preferred stock for $150 per share
- When market value of the common stock reached $15 a share, Company A declared a 3-for-1 stock split, reducing the par value to $188 per share
The following is required:
- Prepare a journal entry for each transaction.
- Discuss the right of shareholders of capital stock for company A that they are entitled to.
- Company A is formed as a corporation and therefore, its shareholders have limited liability. Limited liability means that stockholders can only lose the amount of their investment. Discuss how this limited liability affects a corporation.