Question

Professional Products Inc., a wholesaler of office products, was organized on February 5 of the current year, with an authorization of 25,000 shares of preferred 2% stock, $100 par and 500,000 shares of $10 par common stock. The following selected transactions were completed during the first year of operations:

Feb.	5	Issued 220,000 shares of common stock at par for cash.
	5	Issued 700 shares of common stock at par to an attorney in payment of legal fees for organizing the corporation.
Apr.	9	Issued 68,700 shares of common stock in exchange for land, buildings, and equipment with fair market prices of $153,800, $458,110 and $164,400 respectively.
June	14	Issued 18,200 shares of preferred stock at $115 for cash.

Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles.

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3
4
5
6
7
8
9
10
11
12

Answer 1

CREDIT LIABILITIES EQUITY DATE Feb. 5 DESCRIPTION Cash Common Stock DEBIT $2,200,000 ASSETS $2,200,000 [220,000 shares x $10] $2,200,000 $2,200,000 Feb. 5 $7,000 [700 shares x $10] Organization Expenses (Attorney Fee) Common Stock $7,000 $7,000 $7,000 Apr. 9 Land Buildings Equipment Common Stock Paid-in-Capital in Excess of Par-Common $153,800 $458,110 $164,400 $153,800 $458,110 $164,400 $687,000 $89,310 $687,000 $89,310 [68,700 shares x $10] ($153800+ $458110 + $164400 - $687000] Jun. 14 $2,093,000 $2,093,000 Cash Preferred Stock Paid-in-Capital in Excess of Par-Preferred $1,820,000 $273,000 [18,200 shares x $115] $1,820,000 (18,200 shares x $100] $273,000 ($2093000 - $1820000]