Question

Concord Corporation is authorized to issue 23,500 shares of $50 par value, 10% preferred stock and 130,000 shares of $5 par value common stock. On January 1, 2020, the ledger contained the following stockholders’ equity balances.

Preferred Stock (10,500 shares) $525,000

Paid-in Capital in Excess of Par—Preferred Stock 68,500 Common Stock (63,500 shares) 317,500 Paid-in Capital in Excess of Par—Common Stock 750,000 Retained Earnings 330,000 During 2020, the following transactions occurred. Feb. 1 Issued 2,000 shares of preferred stock for land having a fair value of $127,000. Mar. 1 Issued 1,300 shares of preferred stock for cash at $65 per share. July 1 Issued 17,000 shares of common stock for cash at $7 per share. Sept. 1 Issued 550 shares of preferred stock for a patent. The asking price of the patent was $28,000. Market price for the preferred stock was $70 and the fair value for the patent was indeterminable. Dec. 1 Issued 8,500 shares of common stock for cash at $7.50 per share. Dec. 31 Net income for the year was $265,000. No dividends were declared. (a) Journalize the transactions and the closing entry for net income. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit

Answer 1

Answer :-

Journal entries to record the transaction :-

Date	Particular	Debit	Credit
01/02/2020	Land A/c. Dr.	$127,000
	To Preferred stock A/c (2,000 shares × $50 pr value)		$100,000
	To Paid-in Capital in Excess of Par—Preferred Stock A/c ($127,000 - $100,000)		$27,000
	(To record Issue of 2,000 shares of preferred stock for land )
01/03/2020	Cash A/c. Dr. ( 1,300 share × $65)	$84,500
	To Preferred stock A/c ( 1,300 × 50 par value)		$65,000
	To Paid-in Capital in Excess of Par—Preferred Stock A/c ($84,500 - $65,000)		$19,500
	(To record Issued 1,300 shares of preferred stock for cash at $65 per share)
01/07/2020	Cash A/c Dr. ( 17,000 share × $7)	$119,000
	To Common stock A/c (17,000 share × $5)		$85,000
	To Paid-in Capital in Excess of Par—Common Stock A/c ($119,000 - $85,000)		$34,000
	(To record Issued 17,000 shares of common stock for cash at $7 per share)
01/09/2020	Patent A/c. Dr.( 550 shares × $70)	$38,500
	To Preferred stock A/c (550 shares × $50)		$27,500
	To Paid-in Capital in Excess of Par—Preferred Stock A/c ($38,500 - $27,500)		$11,000
	(To record Issued 550 shares of preferred stock for a patent and Market price for the preferred stock was $70)
01/12/2020	Cash A/c Dr. ( 8,500 shares × $7.50)	$63,750
	To Common stock A/c ( 8,500 shares × $5 par value)		$42,500
	To Paid-in Capital in Excess of Par—Common Stock ($63,750 - $42,500)		$21,250
	(To record Issued 8,500 shares of common stock for cash at $7.50 per share )
31/12/2020	Income summary A/c	$265,000
	To Retained Earnings A/c		$265,000
	(To record Net income of $265,000 )