Problem 18-4. During its first year of operations, Eastern Data Links Corporation entered into the following transactions relating to shareholders’ equity. The articles of incorporation authorized the issue of 8 million common shares, $1 par per share, and 1 million preferred shares, $50 par per share.
Feb. 12 sold 2 million common shares, for $9 per share.
13 Issued 40,000 common shares to attorneys in exchange for legal services.
13 Sold 80,000 of its common shares and 4,000 preferred shares for a total of $945,000.
15 Issued 380,000 of its common shares in exchange for equipment for which the cash price was known to be
$3,688,000.
Required:
Prepare the appropriate journal entries to record each transaction. (If no entry is required for a particular transaction, type “No journal entry required” in the first account field. Enter your answers in whole dollars.)
Date |
General Journal |
Debit |
Credit |
SOLUTION
Date | General Journal | Debit ($) | Credit ($) |
Feb.12 | Cash (2 million * $9) | 18,000,000 | |
Common stock (2 million * $1) | 2,000,000 | ||
Paid in capital in excess of par- Common stock | 16,000,000 | ||
(To record the sale of 2 million common shares at $9 per share of $1 par value) | |||
Feb.13 | Legal expenses (40,000 share * $9) | 360,000 | |
Common stock (40,000 share * $1) | 40,000 | ||
Paid in capital in excess of par- Common stock | 320,000 | ||
(To record issue of common shares in exchange of legal expenses) | |||
Feb.13 | Cash | 945,000 | |
Common stock (80,000*$1) | 80,000 | ||
Paid in capital in excess of par- Common stock [(80,000*$9)- (80,000*$1)] | 640,000 | ||
Preferred stock (4,000*$50) | 200,000 | ||
Paid in capital in excess of par- Preferred stock | 25,000 | ||
(To record sale of common shares and preferred shares) | |||
Feb.15 | Equipment | 3,688,000 | |
Common stock (380,000*$1) | 380,000 | ||
Paid in capital in excess of par- Common stock | 3,308,000 | ||
(To record issue of 380,000 shares $1 in exchange for equipment) |
Problem 18-4. During its first year of operations, Eastern Data Links Corporation entered into the following...
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