Journal Entries
Not what you're looking for?
Problem #4
Prepare journal entries for each of the following unrelated transactions..
a) A firm issues 5,000 shares of $ 2 par value common stock in exchange for $ 20,000 cash.
b) A firm acquires a building with an appraised value of $ 100,000 for $ 30,000 cash and the assumption of
a 25-year, 10% mortgage with a balance of $ 60,000.
c) Acquires $ 1,000 (list price) of inventory for $ 980 cash. The firm treats cash discounts as a reduction in
acquisition cost.
d) A firm pays $ 1,000 to its landlord. The $ 1,000 represents the current month's rent plus the next month's rent
payment in advance.
e) A publisher sells $ 2,000 in magazine subscriptions that will be filled over the next twelve months.
(See attached file for full problem description)
Purchase this Solution
Solution Summary
The solution provides details of the journal entries for various transactions.
Solution Preview
a. A firm issues 5,000 shares of $ 2 par value common stock in exchange for $ 20,000 cash.
The shares are $2 par value and 5,000 have been issued. The total value comes to 10,000. The cash received is 20,000. The additional amount received is the premium over the par value. This additional amount is credited to the additional paid in capital. The Journal entry is
Cash Dr 20,000
Common Stock Cr 10,000 ( for the par value)
Additional Paid in Capital - Common Stock Cr 10,000 ( for the ...
Purchase this Solution
Free BrainMass Quizzes
Academic Reading and Writing: Critical Thinking
Importance of Critical Thinking
Motivation
This tests some key elements of major motivation theories.
Six Sigma for Process Improvement
A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.
Introduction to Finance
This quiz test introductory finance topics.
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.