Question

Selected Stock Transactions Alpha Sounds Corp., an electric guitar retailer, was organized by Michele Kirby, Paul Glenn, and Gretchen Northway. The charter authorized 1,000,000 shares of common stock with a par of $1. The following transactions affecting stockholders' equity were completed during the first year of operations: Journalize the entries to record the transactions. a. Issued 100,000 shares of stock at par to Paul Glenn for cash. b. (1) Issued 3,000 shares of stock at par to Michele Kirby for promotional services provided in connection with the organization of the corporation, and (2) issued 45,000 shares of stock at par to Michele Kirby for cash. c. Purchased land and a building from Gretchen Northway in exchange for stock issued at par. The building is mortgaged for $180,000 for 20 years at 6%, and there is accrued interest of $5,200 on the mortgage note at the time of the purchase. It is agreed that the land is to be priced at $60.000 and the building at 5225,000 and that Gretchen Northway's equity will be exchanged for stock at par. The corporation agreed to assume responsibility for paying the mortgage note and the accrued interest

Answer 1

Answer :-

a)Issued 100,000 shares of stock at par to Paul Glenn for cash.

Date	Particular	Debit	Credit
	Cash A/c . Dr.	$100,000
	To Common stock A/c		$100,000
	(To record issue of stock at par to Paul Glenn for cash )

Note :- Common stock = No. of share issued × Par value per share.

Common stock = 100,000 share × $1 = $ 100,000

b) 1)Issued 3,000 shares of stock at par to Michele Kirby for promotional services provided in connection with the organization of the corporation, and (2) issued 45,000 shares of stock at par to Michele Kirby for cash.

	Particular	Debit	Credit
(1)	Promotional Services / Expense A/c Dr. (3000 share × $1 par value )	$3,000
	To Common stock A/c		$3,000
	( To record issue of 3000 share at par for promotional expenses)
(2)	Cash A/c. Dr. ( 45000 share @ $ 1 per share)	$45,000
	To Common stock A/c		$45,000
	( To record issue of 45,000 shares at par to Michael Kirby)

c) Journal entry for Purchased land and buildings -

c)	Particular	Debit	Credit
	Land A/c. Dr	$60,000
	Building A/c. Dr.	$225,000
	To Mortgage Note A/c		$180,000
	To Accured Interest A/c		$5,200
	To Common stock A/c.		$99,800

Note :- After giving Mortgage Note and Accured Interest the common stock is issued in exchange. The common stock issued is 99,800 shares @ $1 par value.