Question

Issuing Stock

Work Place Products Inc., a wholesaler of office products, was organized on July 1 of the current year, with an authorization of 100,000 shares of 2% preferred stock, $60 par and 600,000 shares of $15 par common stock. The following selected transactions were completed during the first year of operations:

Journalize the transactions.

July. 1. Issued 125,000 shares of common stock at par for cash.

July. 1

July. 1 Issued 550 shares of common stock at par to an attorney in payment of legal fees for organizing the corporation.

July. 1

Aug. 7. Issued 25,500 shares of common stock in exchange for land, buildings, and equipment with fair market prices of $70,000, $380,000, and $85,500, respectively.

For a compound transaction, if an amount box does not require an entry, leave it blank.

Aug. 7

Sept. 20. Issued 30,000 shares of preferred stock at $74 for cash.

For a compound transaction, if an amount box does not require an entry, leave it blank.

Sept. 20

Answer 1

| Date July 1 Account titles and Explanation Cash Common stock Being shares issued for cash at par recorded) Debit | Credit $1,875,000 $1.875,000 July 1 S 8.250 Organizational Expenses Common stock (Being legal fees paid in exchange of shares recorded) $ 8.250 $ 70,000 $ 380,000 S 85,500 Aug. 7 Land Building Equipment Common Stock Paid in capital in excess of par - Common stock (Being common stock issued in exchange of assets recorded) $ 382,500 $ 153,000 $2.220,000 Sep. 20 Cash Preferred Stock Paid in capital in excess of par - Preferred Stock (Being preferred stock issued recorded) $1,800,000 $ 420,000

July 1 July 1 Aug. 1 Working Notes: Common stock = 125,000*$15 = $1.875.000 Organizational Expenses = 550*$15 = $8,250 Common stock = 25,500*$15 = $382,500 Paid in capital in excess of par - Common stock = $70,000+$380,000+$85,000-$382,500 = $153,000 Cash = 30,000*$74 = $2,220,000 Preferred Stock = 30,000*S60 = $1,800,000 Paid in capital in excess of par - Preferred Stock = $2,220,000-$1,800,000 = $420,000 Sep. 20