Answer:
Eastern Data Links Corporation
Journal entries
Step 1.
Issuance for Common stock at a premium in exchange for cash
Feb 12,
Dr. Cash account with $18,000,000
Cr. $1 Ordinary share Capital Account with $2,000,000
Cr. Ordinary share premium Account with $16,000,000
(Being $18million received for 2million shares valued at $1 and sold at a premium of $9)
Step 2.
Issuance for Common stock at a premium in settlement of a liability due
Feb 13,
Dr. Accounts Payable account with $360,000
Cr. $1 Ordinary share Capital Account with $40,000
Cr. Ordinary share premium Account with $320,000
(Being $360,000 legal expense liquidation in exchange of 40,000 shares valued at $1 and sold at a premium of $9)
