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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.

#### 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