During the first year of operation, Sitwell Corporation had the following transaction pertaining to its common stock.
Jan 10 Issued 80,000 shares for cash at $8 per share
Mar 1 Issued 5,000 shares to attorneys in payment of a bill for $35,000 for services rendered in helping the company to incorporate.
July 1 Issued 30,000 shares for cash at $8 per share.
Sept 1 Issued 60,000 shares for cash at $10 per share.
(a) Prepare the journal entries for these transactions, assuming that the common stock has a par value of $3 per share.
(b) Prepare the journal entries for these transactions, assuming that the common stock is on-par with a stated value of $2 per share.
Before Gordon Corporation engages in the treasury stock transaction listed below, in general the ledger reflects, among others, the following account balances (par value of its stock is $30 per share).
Paid-in Capital in Excess of par-Common stock/ $99,000
Common stock/ $270,000
Retained Earning / $80,000
Record the treasury stock transaction (given below) under the cost method of handling treasury stock; use the FIFO method for purchase-sale purposes.
(a) Bought 380 shares of treasury stock at $40 per share
(b) Bought 300 shares of treasury stock at $45 per share.
(c) Sold 350 shares of treasury stock at $45 per share
(d) Sold 110 shares of treasury stock at $38 per share.
Journal entries for the first question would be calculated as follows:
01-10 Cash 80,000 x 8 = 640,000 (Debit)
Common stock 80,000 x 3 = 240,000
Paid in excess of par 400,000 (640,000 - 240000)
03-01 Organizational expense 35,000
Common stock 5,000 x 3 = 15,000
Paid in capital, in excess of par 20,000 (35-15)
07-01 Cash 30,000 x 8 = 240,000
Common stock 30,000 x 3 = ...
This solution provides a detailed explanation of the questions presented by the student. All journal entries for Sitwell Corporation and Gordon Corporation are provided. Detailed calculations and entries are provided.