Question

Mar. 2 Issued 5,000 shares of $6 par value common stock to attorneys in payment of a bill for $35,600 for services performed in helping the company to incorporate.
June 12 Issued 61,900 shares of $6 par value common stock for cash of $440,900.
July 11 Issued 2,075 shares of $120 par value preferred stock for cash at $140 per share.
Nov. 28 Purchased 1,600 shares of treasury stock for $82,500.

Required:
Journalize all the transactions.

Answer 1

Answer:

Mar. 2

Debit  : Attorney Expense $35,600

Credit : Common Stock (5,000 shares  x $6) $30,000

Credit : Paid In Excess of Par $5,600

June 12

Debit  : Cash $440,900

Credit : Common Stock (61,900 shares  x $6) $371,400

Credit : Paid In Excess of Par $69,500

July 11

Debit  : Cash (2,075 shares x $140) $290,500

Credit : Preferred Stock (2,075 shares x $120) $249,000

Credit : Paid in excess of par (2,075 shares x $20) $ 41,500

Nov. 28

Debit  : Treasury Stock $82,500

Credit : Cash $82,500

Explanation:

With par value shares, we have a reserve called Paid in excess of par. This reserve serves to accommodate all payments made above the par values of shares issued.