Question

Exercise 15-9

Pistons Inc. recently hired a new accountant with extensive experience in accounting for partnerships. Because of the pressure of the new job, the accountant was unable to review what he had learned earlier about corporation accounting. During the first month, he made the following entries for the corporation’s capital stock.

Date	Account Titles and Explanation	Debit	Credit
May 2	Cash	228,650
	Capital Stock		228,650
	(Issued 13,450 shares of $5 par value common stock at $17 per share)
May 10	Cash	713,400
	Capital Stock		713,400
	(Issued 11,890 shares of $30 par value preferred stock at $60 per share)
May 15	Capital Stock	42,900
	Cash		42,900
	(Purchased 2,860 shares of common stock for the treasury at $15 per share)
May 31	Cash	10,070
	Capital Stock		5,924
	Gain on Sale of Stock		4,146
	(Sold 530 shares of treasury stock at $19 per share)

On the basis of the explanation for each entry, prepare the entries that should have been made for the capital stock transactions. (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.)

Answer 1

Date	Particulars	Debit $	Credit $
02-May	Cash	228,650
	Common stock		67,250
	Paid in capital		161,400
	(Issued 13,450 shares of $5 par value common stock at $17 per share)
10-May	Cash	713,400
	Preferred stock		356,700
	Paid in capital		356,700
	(Issued 11,890 shares of $30 par value preferred stock at $60 per share)
15-May	Treasury stock	42,900
	Cash		42,900
	(Purchased 2,860 shares of common stock for the treasury at $15 per share)
31-May	Cash	10,070
	Treasury stock		7,950
	Paid in capital		2,120
	(Sold 530 shares of treasury stock at $19 per share)