1. Richman's Corporation has the following was formed on January 1, the corporate charter provided for...
1. Richman's Corporation has the following was formed on January
1, the corporate charter provided for
500,000 shares of $5 par value stock. The following transaction was
engaged in by the corporation during the first month of
operation.
Jan. 5 The corporation issued 8,000 shares of common stock for cash of $25 per share.
What would the amount credited to the Paid in Capital account on January 5?
a. 160,000
b. 240,000
c. 440,000
2. On June 20, Blaney Company purchased 2,000 shares of ABC Company common stock for $32 per share plus a $75 brokerage fee. These shares are categorized as short-term investment in trading securities. Which of the following is a correct entry to record the purchase:
a. debit common stock 64,000
b. debit short term investment trading securities 64,075
c. debit brokerage expense for 75
Homework Answers
1) Journal entry
| Date | account and explanation | Debit | Credit |
| cash (8000*25) | 200000 | ||
| Common Stock | 40000 | ||
| Paid in capital in excess of par value | 160000 |
So answer is a) $160000
2) Journal entry
| Date | account and explanation | Debit | Credit |
| Short term investment (2000*32+75) | 64075 | ||
| cash | 64075 | ||
So answer is b) debit short term investment trading securities 64,075
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