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Sixnut Inc: Prepare journal entries for stock transactions

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.

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