Sarasota Corporation is authorized to issue 49,000 shares of $5
par value common stock. During 2020, Sarasota took part in the
following selected transactions.
1. | Issued 4,600 shares of stock at $42 per share, less costs related to the issuance of the stock totaling $6,300. | |
2. | Issued 1,000 shares of stock for land appraised at $49,000. The stock was actively traded on a national stock exchange at approximately $43 per share on the date of issuance. | |
3. | Purchased 470 shares of treasury stock at $47 per share. The treasury shares purchased were issued in 2016 at $44 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. |
(Credit account titles are automatically indented when
amount is entered. Do not indent manually. If no entry is required,
select "No Entry" for the account titles and enter 0 for the
amounts.)
No. |
Account Titles and Explanation |
Debit |
Credit |
---|---|---|---|
(a) |
enter an account title to record the first item |
enter a debit amount |
enter a credit amount |
enter an account title to record the first item |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the first item |
enter a debit amount |
enter a credit amount |
|
(b) |
enter an account title to record the second item |
enter a debit amount |
enter a credit amount |
enter an account title to record the second item |
enter a debit amount |
enter a credit amount |
|
enter an account title to record the second item |
enter a debit amount |
enter a credit amount |
|
(c) |
enter an account title to record the third item using the cost method |
enter a debit amount |
enter a credit amount |
enter an account title to record the third item using the cost method |
enter a debit amount |
enter a credit amount |
Solution: | ||||
Journal Entries | ||||
Transaction | Account Title and explanation | Debit | Credit | |
1 | Cash (4,600 Shares X $ 42) | $ 193,200 | ||
Common Stock (4,600 Shares X $ 5) | $ 23,000 | |||
Paid in capital in excess of Par (Balance) | $ 170,200 | |||
(To Record the issuance of Common Shares) | ||||
2 | Land (1000 X $ 43) | $ 43,000 | ||
Common Stock (1,000 Shares X $ 5) | $ 5,000 | |||
Paid in capital in excess of Par (Balance) | $ 38,000 | |||
(To Record the issuance of Common Shares for Land) | ||||
3 | Treasurry stock (470 Shares X $ 47) | $ 22,090 | ||
Cash | $ 22,090 | |||
(To Record the purchase of treasurry Stock) | ||||
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