Question

Professional Products Inc., a wholesaler of office products, was organized on February 5 of the current year, with an authorization of 26,000 shares of preferred 2% stock, $100 par and 550,000 shares of $10 par common stock. The following selected transactions were completed during the first year of operations:

Feb.	5	Issued 247,000 shares of common stock at par for cash.
	5	Issued 300 shares of common stock at par to an attorney in payment of legal fees for organizing the corporation.
Apr.	9	Issued 69,100 shares of common stock in exchange for land, buildings, and equipment with fair market prices of $153,500, $488,060 and $160,000 respectively.
June	14	Issued 15,000 shares of preferred stock at $109 for cash .MAKE A JOURNAL

Answer 1

Journal

February 5	Cash	2,470,000
	Common stock		2,470,000
February 5	Organization expense	3,000
	Common stock		3,000
April 9	Land	132,328
	Building	420,741
	Equipment	137,931
	Common stock		691,000
June 14	Cash	1,635,000
	Preferred stock		1,500,000
	Paid in capital, in excess of par - Preferred		135,000

	Fair market value	Percentage of Fair market value	Value to be recorded
Land	153,500	153,500/801,560 = 19.1501572%	691,000 x 19.1501572% = 132,328
Building	488,060	488,060/801,560 = 60.8887669%	691,000 x 60.8887669% = 420,741
Equipment	160,000	160,000/801,560 = 19.9610759%	691,000 x 19.9610759% = 137,931
	801,560		691,000

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