Prepare general journal entries for stock transactions
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Presented below is information related to Alvarenga Company:
1. The company is granted a charter that authorizes issuance of 15,000 shares of $100 par value preferred stock and 40,000 shares of no-par common stock.
2. 8,000 shares of common stock are issued to the founders of the corporation for land valued by the board of directors at $300,000. The board establishes a stated value of $5 a share for the common stock.
3. 5,000 shares of preferred stock are sold for cash at $120 per share.
4. The company issues 100 shares of common stock to its attorneys for costs associated with starting the company. At that time, the common stock was selling at $60 per share.
Instructions
Prepare the general journal entries necessary to record these transactions or state 'No entry necessary'.
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Solution Summary
Given a series of events regarding the formation of a corporation and the issuance of stock in the corporation, this solution illustrates how to prepare the general journal entries necessary to record these transactions or indicates when no entry is necessary.
Solution Preview
1. The company is granted a charter that authorizes issuance of 15,000 shares of $100 par value preferred stock and 40,000 shares of no-par common stock.
Being granted a charter is a legal event but is not an economic event. Because no economic events have occurred, so no journal entry is necessary.
2. 8,000 shares of common stock are issued to the founders of the corporation for land valued by the board of directors at $300,000. The board establishes a stated value of $5 a ...
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