Question

. A company is authorized to issue 750,000 shares of $5 par value common stock. Prepare journal entries to record the following selected transactions that occurred during the company's first year of operations:
Jan. 10 Sold 102,000 shares of common stock for $8 cash per share.
jan. 15 Exchanged 10,000 shares of common stock for equipment with a market value of $80,000.
Feb. 1 Exchanged 500 shares of common stock for $3,000 of legal services Incurred during the company's organization.

Answer 1

Answer:

The answers are:

January 10

Cash                                          $816,000

Common stock                                                  $510,000

Contributed capital in excess

of par value, common stock                             $306,000

January 15

Equipment                                   $80,000

Common stock                                                    $50,000

Contributed capital in excess

of par value, common stock                               $30,000

February 1

Organizational expenses              $3,000

Common stock                                                    $25,000

Contributed capital in excess

of par value, common stock                                    $500

Explanation:

Contributed capital in excess of par value is the amount of money (or other assets) over the par value of stock (in this case $5 per common stock) that the company received form shareholders in exchange for stock.