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 6 Issues 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

SOLUTION : A
	Date	General Journal	Debit	Credit
	Jan, 06	Cash (60,000 Shares X $ 36)	$21,60,000
		Common Stock (60,000 Shares X $ 5)		$3,00,000
		Paid in Capital in excess of par - Common Stock		$18,60,000
	Jan, 19	Cash	$70,000
		Preferred Stock (2000 X $ 30)		$60,000
		Paid in Capital in excess of par - Preferred Stock		$10,000
	Jan, 26	Land	$3,05,000
		Building	$6,40,000
		Machinary	$7,60,000
		Common Stock (55,000 Shares X $ 5)		$2,75,000
		Paid in Capital in excess of par - Common Stock		$14,30,000
SOLUTION : B		HADE COMPANY
		BALANCE SHEET
		01/31/20
		ASSETS
		FIXED ASSETS
		Land	$3,05,000
		Building	$6,40,000
		Machinary	$7,60,000
			$17,05,000
		STOCKHOLDER'S EQUITY
		Paid in Capital
		Common Stock	$5,75,000
		Paid in Capital in excess of par - Common Stock	$32,90,000
		Preferred Stock	$60,000
		Paid in Capital in excess of par - Preferred Stock	$10,000
			$39,35,000