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Sixnut Inc: Prepare journal entries for stock transactions

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Sixnut, Incorporated has been authorized to issue 1,000,000 shares of $1 par common stock, and
100,000 shares of 8%, $100 par, cumulative, preferred stock. During the first six months of
operation, the following transactions occurred related to the stock.

Jul 1st Sold 200,000 shares of common stock for $15 per share, and 100,000
shares of preferred stock, sold at par.

Jul 1st Issued 100,000 shares of common stock in exchange for the following
assets: Land $250,000
Building 750,000
Equipment 300,000
Inventory 200,000
The market value of the stock was $15 per share.

Sep 1st Sold 100,000 shares of common stock for $20 per share.

Oct 31st Repurchased 50,000 shares of common stock for $25 per share. Sixnut
has elected to use the cost method to account for the treasury stock.

Nov 30th Re-sold 20,000 shares of the treasury stock for $35 per share.

Dec 31st Recorded net income for the first six months in the amount of $5,000,000.
(Hint: Debit: Income Summary)

Required: Prepare, in proper form, the journal entries required to account for the stock transactions.

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Solution Summary

The solution prepares journal entries for stock transactions. The recorded net income for the first six months in the amount are determined.

$2.19