Question

Issuing Stock Work Place Products Inc., a wholesaler of office products, was organized on July 1 of the current year, with an authorization of 50,000 shares of 3% preferred stock, $55 par and 250,000 shares of $25 par common stock. The following selected transactions were completed during the first year of operations: Journalize the transactions July. 1. Issued 115,000 shares of common stock at par for cash July July 1 Issued 350 shares of common stock at par to an attorney in payment of legal fees for organizing the corporation July. I Aug. 7. Issued 22,500 shares of common stock in exchange for land, buildings, and equipment with fair market prices of $105,000, $575,000, and $130,000, respectively For a compound transaction, if an amount box does not require an entry, leave it blank. Aug. 7

Answer 1

Solution:

Journal entries

Date	General journal	Debit	Credit
Jul-01	Cash a/c Dr (115000 x 25)	2875000
	To common stock a/c		2875000
Jul-01	Organizational expenses a/c Dr (350 x 25)	8750
	To common stock a/c		8750
Aug-07	Land a/c Dr	1,05,000
	Buildings a/c Dr	5,75,000
	Equipment a/c Dr	1,30,000
	To common stock a/c (22500 x 25)		562500
	To paid in capital in excess of par common stock a/c		2,47,500
Sep-20	cash a/c Dr (13000 x 69)	897000
	To Preferred stock a/c Dr (13000 x 55)		715000
	To paid in capital in excess of par preferred stock a/c (69-55) x 13000		182000