Question

Chapter 10 - Part I Winter 2020 4 The following information is provided for the newly formed corporation, LAX, Inc. on January 1, 2021: Outstanding Common stock, $1 par value: Preferred stock, 6.5%, $100 par value: Authorized 100,000,000 1,000,000 10 1. On 7/1/21, LAX, Inc. issued 30,000,000 shares of of common stock in an initial public offerring (IPO) for $32 per share. Record 11 the journal entry: Accounts Debits Credits Dale 2021/7/1 18 2. On 9/30/21, LAX, Inc. issued 500,000 shares of preferred stock in exchange for land, a building, and cash 19 worth $11,000,500, $27,995,000, and $15,000,000, respectively. Record the transaction: 20 Date Accounts Debits Credits 2021/9/30 28 3. On 17/22, LAX, Inc.exchanged 5,000,000 shares of common stock for a patontand trademark, valued at $85 Million and $6.5 29 Million, respectively. Record the transaction: Accounts Debits Credits Date 2022/1/1 37 4. Update the balance ofoutstanding shares: 39 Outstanding Common stock, $1 par value: Preferred stock, 6.5%, $100 par value: Authorized 100,000,000 1,000,000 43 The following information was announced by the Board of Directors of LAX, Inc.. Date 04/01/22 04/15/22 05/05/22 Event Declared dividends on stock Date ofrecord Paymentdate Common 0.10 Preferred 6.50% 50 5. Make the appropriate journal entries: Accounts Debits Credits Date 2022/4/1 Accounts Debits Credits Date 2022/4/15 Date Accounts Debits Credits 2022/5/5 706. On 6/30/22, LAX repurchased 500,000 shares of common stock for $4235 each and placed them in the treasury. Record 71 the transaction: 73 Accounts Debits Credits Date 2022/6/30 74 75 77 7. On 12/31/22, LAX sold 10,000 shares of treasury stock for $49.05 oach. Record the transaction: Accounts Debits Credits Date 2022/12/31

Answer 1

Answer:

7/1/2021	Cash	$ 960,000,000
	Common stock (30,000,000 × $1)		$ 30,000,000
	Additional paid-in capital-common stock (30,000,000 × $31)		930,000,000
	(to record issue of 30,000,000 common stock)
9/30/2021	Land	11,000,500
	Building	27,995,000
	Cash	15,000,000
	Preferred stock (500,000 × $100)		50,000,000
	Additional paid-in capital-preferred stock (53,995,500-50,000,000)		3,995,500
	(to record issue of 500,000 preferred stock)
1/1/2022	Patents	85,000,000
	Trademark	6,500,000
	Common stock (5,000,000 × $1)		5,000,000
	Additional paid-in capital-common stock (91,500,000-5,000,000)		86,500,000
	(to record issue of 5,000,000 common stock)
4/1/2022	Retained earnings	6,750,000
	Dividend payable		6,750,000
	(to record dividend liability on declaration of dividend)
4/15/2022	No entry required on record date
5/5/2022	Dividend payable	6,750,000
	Cash		6,750,000
	(to record payments of dividend on payment date)

Dividend calculation:

	Authorized	Outstanding	Dividend
Common stock, $1 par value	100,000,000	35,000,000	3,500,000
Preferred stock, 6.5% $100 par value	1,000,000	500,000	3,250,000
			6,750,000

6/30/2022	Treasury stock	$ 21,175,000
	Cash		$ 21,175,000
	(to record repurchase of 500,000 common stock)
12/31/2022	Cash	490,500
	Treasury stock		423,500
	Additional paid-in capital-treasury stock		67,000
	(to record sale of 10,000 shares of treasury stock)