Question

Make necessary entries for all the transactions in question 1 below and make all necessary entries for all the transactions in question 2 including necessary entries related to the bonds up to December 31, 2019. 1. Omari and Alexandre started a partnership business and made the following contributions into the 0 and A Partnership Business: Omari contributed $300,000 cash and Alexandre contributed a building that has a book value of $125,000 and a fair market value of $150,000 plus cash of $210,000. 2. Tim Clancy and five of his friends obtained a charter for the establishment of a Textile firm. The company's shares were publicly traded. The company performed the following transactions on January 1, 2019. The charter established a par value of $2 for the shares and sold 500,000 shares at $6 per share Another investor contributed a building that had a book value of $450,000. The building was appraised for $550,000 but the contributor believed the trade-in value of the building should I $700,000. The investor contributed the building in exchange for 300,000 shares that were publicly traded at $3 per share. The company sold 200,000 8% Non-cumulative Preferred Stocks, $5 par, at a price of $8 per share.

Answer 1

Ans: 1 Entries in the books of O and A Partnership Business: Account 1 Credit Cash Omarl, Capital Debit $ 300,000 $ 300,000 (To record the receipt of cash in the form of capital) Building (recorded at Market Value) Cash Alexandre, Capital $ 150,000 $ 210,000 $360,000 (To record the receipt of Building at Market Value and cash in the form of capital) Ans: 2 Date Account Debit Credit Jan 1, 2019 $3,000,000 Cash (500,000 x 56) Common Stock Paid in Capital in Excess of Par (To record 500,000 $2 par for common stock at a premium). $ 1,000,000 $ 2,000,000 $ 550,000 $ 50,000 Jan 1, 2019 Building (Appraised Value) Paid in Capital in Excess of Par Common Stock (To record the receipt of building at Appraised value for common stock). $ 600,000 $ 1,600,000 Jan 1, 2019 Cash ( 200,000 x $8) 8% Non Cumulative Preferred Stock, $5 Par Paid in Capital in Excess of Par, Preferred Stock $ 1,000,000 $ 600,000 (To record the issue of Preferred Stock at a Premium.) $ 300,000 Jan 1, 2019 Cash 6% Bonds Payable issued a4 4% Yield (To record the issue of 6% Bonds at 4% Yield) $ 300,000 Apr 1, 2019 $ 60,000 Treasury Stock - Common (10,000 x $6) Cash (Acquired 10,000 of Treasury stock at $6). $ 60,000 $ 24,000 pr 25, 2019 Cash Treasury Stock - Common Pald - In - Capital - Trasury Stock (Reissued 3,000 of treasury stocks) $ 18,000 $ 6,000

May 5, 2019 Cash Treasury Stock - Common Pald - In - Capital - Trasury Stock (Reissued 1,000 of treasury stocks) $5,000 $1,000 $6,000 July 1, 2019 $ 12,000 Bond Interest Expenses Cash (Interest on Bond Paid) $ 12,000 $ 800,000 Dec 31, 2019 Dividend on Common Share Cash (Interest on Common Share Paid) $ 800,000 $ 80,000 Dec 31, 2019 Dividend on Preferred Stock Cash (Interest on Preferred Stock Paid) $ 80,000 Jan 1, 2020 $ 12,000 Bond Interest Expenses Cash (Interest on Bond Paid) $ 12,000 The journal entries to record the above transactions.