Question

Monty Corporation is authorized to issue 55,000 shares of $5 par value common stock. During 2020, Monty took part in the following selected transactions. 1. Issued 4,500 shares of stock at $42 per share, less costs related to the issuance of the stock totaling $9,100. 2. Issued 1,200 shares of stock for land appraised at $55,000. The stock was actively traded on a national stock exchange at approximately $43 per share on the date of issuance. 3. Purchased 480 shares of treasury stock at $44 per share. The treasury shares purchased were issued in 2016 at $41 per share. (a) Prepare the journal entry to record item 1. (b) Prepare the journal entry to record item 2. (c) Prepare the journal entry to record item 3 using the cost method.

Answer 1

Credit Debit $179,900 Si.No. Account Titles with explanation (a) Cash Common Stock Paid in Capital in Excess of Par - Common stock S 22.500 $157,400 (b) $ 51,600 Land Common stock Paid in Capital in Excess of Par - Common stock $ 6,000 $ 45,600 (c) Treasury stock $ 21,120 Cash $ 21.120 Working Notes: a b Cash=(4500*$42)-$9,100 = $179,900 Common Stock =4500*$5 = $22,500 Paid in Capital in Excess of Par - Common stock = $179,900-$22,500 = $157,400 Land = 1200*543 = $51,600 Common stock = 1200*S5 = $6,000 Paid in Capital in Excess of Par - Common stock = $51,600-$6,000 = $45,600 Treasury stock = 480*944 = $22.120