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    Recording the Issuance of Common and Preferred Stock

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    2. (Recording the Issuance of Common and Preferred Stock) Kathleen Battle Corporation was organized on January 1, 2003. It is authorized to issue 10,000 shares of 8%, $100 par value preferred stock, and 500,000 shares of no par common stock with a stated value of $1 per share. The following stock transactions were completed during the first year.

    Jan. 10 Issued 80,000 shares of common stock for cash at $5
    per share.

    Mar. 1 Issued 5,000 shares of preferred stock for cash at $108
    per share.

    Apr. 1 Issued 24,000 shares of common stock for land. The
    asking price of the land was $90,000; the fair market
    value of the land was $80,000.

    May 1 Issued 80,000 shares of common stock for cash at $7
    per share.

    Aug. 1 Issued 10,000 shares of common stock to attorneys in
    payment of their bill of $50,000 for services rendered
    in helping the company organize.

    Sep. 1 Issued 10,000 shares of common stock for cash at $9
    per share.
    Nov. Issued 1,000 shares of preferred stock for cash at $112
    per share.

    Prepare the journal entries to record the above transactions.

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    https://brainmass.com/business/finance/recording-the-issuance-of-common-and-preferred-stock-64926

    Solution Preview

    The journal entries are :

    Since the started value is $1 and the issue price is $5, we need to show them separately
    Jan. 10 Cash (80,000 X $5)................ 400,000
    Common Stock (80,000 X $1).................. 80,000
    Paid-in Capital in Excess of Stated
    Value-Common Stock........................ 320,000
    (80,000 X $4)

    The par value of preferred stock is $100 and the isshue price is $108, so $8 would be the excess paid in capital

    Mar. 1 Cash (5,000 X $108)........ 540,000
    Preferred Stock (5,000 X $100)............... 500,000
    Paid-in Capital in Excess of Par
    ...

    Solution Summary

    The solution explains the journal entries to be made for recording the Issuance of Common and Preferred Stock for Kathleen Battle Corporation

    $2.19

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