Reference no: EM132965031

Question - Spector Company began the 20X3 calendar year with the following balances in its contributed capital accounts:

Preferred stock, $100 par value; authorized, 1 million shares; issued and outstanding, 200,000 shares $20,000,000

Common stock, $5 par value; authorized, 5 million shares; issued and outstanding, 1,500,000 shares 7,500,000

Contributed capital in excess of par - preferred 2,000,000

Contributed capital in excess of par - common 10,000,000

During 20X3, the following stock transactions occurred:

a. Issued 100,000 shares of common at $18 per share. Incurred stock issue costs of $80,000.

b. Issued 20,000 shares of preferred for $2,400,000. As a "sweetener," Spector included one share of common stock with each five shares of preferred. The market prices of the common and preferred at the time of issuance were $15 and $120 per share, respectively.

c. Received subscriptions for 200,000 shares of common at $18 per share. Subscribers paid one-third of the subscription price as a down payment, with the remainder due in two equal installments in 30 and 60 days. (The installments are due in 20X4).

Required -

1. Prepare journal entries to record the stock transactions.

2. Prepare the contributed capital section of Spector Company's balance sheet at December 31, 20X3.