Question

Prepare the issuer's journal entry for each of the following separate transactions. On March 1, Atlantic Co. issues 43,500 shares of $4 par value common stock for $300,500 cash. On April 1, OP Co. issues no-par value common stock for $72,000 cash. On April 6, MPG issues 2,200 shares of $25 par value common stock for $41,000 of inventory, $145,000 of machinery, and acceptance of a $91,000 note payable.

Answer 1

Answer:

Atlantic Co. Journal entries

a.

March 1

Dr Cash$300,500

Cr Common Stock $174,000

(43,500×4)

Cr Paid-in Capital$126,500

($300,000-$174,000)

(Record of common stock for cash)

b.

April 1

Dr Cash$72,000

Cr Common Stock$72,000

(Record of common stock for cash)

c.

April 6

Dr Inventory $41,000

Dr Machinery$145,000

Dr Note Receivable$91,000

Cr Common Stock$55,000

(2,200 shares *$25 per share)

Cr Paid-in Capital $222,000

($145,000+$91,000+$41,000=$277,000-$55,000= $222,000)

(To record Insurance for Inventory, machinery,and notes receivable)

Explanation:

Since On March 1 Atlantic Co. was said to issues 43,500 shares of $4 par value common stock for $300,500 this means that we have to

Debit Cash with $300,500 and Credit Common Stock with $174,000(43,500×4) as well as Credit Paid-in Capital with $126,500 ($300,000-$174,000)

On April 1, OP Co as well issues no-par value common stock for $72,000 cash this means we have to Debit Cash with $72,000 and Credit Common Stock with the same amount .

While On April 6, based on information given to us about MPG transaction, we have to record Insurance for Inventory, machinery,and notes receivable by Debiting each and Crediting common stock and paid in capital .