Question

On December 29, 2019, Hade Company was authorized to issue 100,000 shares of $5 par value preferred stock and 600,000 shares of $30 par value common stock. It then completed the following transactions in the month of January 2020: 

Jan. 6Issues 60,000 shares of common stock at $36 per share for cash.   Jan. 19

Issued 2,000 shares of preferred stock for $70,000 cash.

Jan. 26

Exchanged 55,000 share of common stock for the following assets at the indicated fair market values:

Land                   $305,000

Building            $640,000

Machinery       $760,000

Required:

A.  Prepare the journal entries to record the above transactions. 

B.  Prepare the balance sheet of the company as of January 31, 2020.

Answer 1

A. Prepare the journal entries to record the above transactions.

		Debit	Credit
6-Jan	Cash	$ 1,800,000
	Common Stock (60000*$5)		$     300,000
	Additional Paid-in Capital-Common Stock		$ 1,500,000
		Debit	Credit
19-Jan	Cash	$       70,000
	Prffered Stock (2000*$30)		$       60,000
	Additional Paid-in Capital-preferred stock		$       10,000
		Debit	Credit
26-Jan	Land	$     305,000
	Building	$     640,000
	Machinery	$     760,000
	Common Stock (55000*$5)		$     275,000
	Additional Paid-in Capital-Common Stock		$ 1,430,000

  Prepare the balance sheet of the company as of January 31, 2020.

Partial Balanace Sheet
Current Assets
Cash		$     1,870,000
Non Current assets
Land	$                                                                   305,000
Building	$                                                                   640,000
Machinery	$                                                                   760,000	$     1,705,000
Total Assets		$    3,575,000
Liabilities
Stock Holders Equity
Common Stock	$                                                                   575,000
Prffered Stock	60000
Additional Paid-in Capital-Common Stock	$                                                                2,930,000
Additional Paid-in Capital-preferred stock	$                                                                     10,000	$    3,575,000
Total Liabilities		$     3,575,000