Question

Instructions A corporation was organized on January 1 of the current year, with an authorization of 20,000 shares of 4%, 512 par preferred stock, and 100,000 shares of $3 par common stock The following selected transactions were completed during the first year of operations Jan. 3 31 Issued 15,000 shares of common stock at 523 per share for cash Issued 200 shares of common stock to an attorney in payment of legal fees for organizing the corporation. The value of the stock at the time of payment was $25 per share. Issued 20,000 shares of common stock in exchange for land, buildings and equipment with fair market prices of $65,000, $120,000, and $45,000 respectively Issued 2 000 shares of preferred stock at $56 for cash Feb 24 Mar. 15 Required: Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles. General Journal

journalize

Answer 1

Journal entries in the books of Corporation

Date Particulars Debit ($) Credit ($) No Entry. Jan-01 For authorisation of capital, no entry is required Dr 345000 Jan-03 Cash a/c To Security Premium a/c (($23 - $3)*15000) To Common Stock a/c ($3* 15000) (Being Common stock of 15,000 shares at $23 each were issued for cash) 300000 45000 Dr 5000 4400 600 Jan-31 Legal fee a/c To Security Premium a/c (($25 - $3)*200) To Common Stock a/c ($3*200) (Being common stock of 200 shares at $25 each issued to attorney) Note: Legal fee shall be valued at fair value of asset givenup. 65000 120000 45000 170000 60000 Feb-24 Land a/c Dr Building a/c Equipment a/c Dr To Security Premium a/c ($230000-$60000) To Common Stock a/c ($3*20000) (Being land, building and equipment brought in exchange of common stock of 20000 shares) Note: In absence of fair value of asset givenup, fair value of asset received shall be considered for valuation of asset givenup Mar-15 Cash a/c Dr 112000 To Security Premium a/c (($56 - $12)*2000) To 4% Preference Stock a/c ($12* 2000) (Being Preference stock of 2,000 shares at $56 each were issued for cash) 88000 24000