Question

Alpha Sounds Corp., an electric guitar retailer, was organized by Michele Kirby, Paul Glenn, and Gretchen Northway. The charter authorized 1,000,000 shares of common stock with a par of $1. Journalize the entries to record the following transactions affecting stockholders' equity, which were completed during the first year of operations. Refer to the Chart of Accounts for exact wording of account titles.
A) Issued 100,000 shares of stock at par to Paul Glenn for cash.
B) Issued 3,000 shares of stock at par to Michele Kirby for promotional services provided in connection with the organization of the corporation, and issued 45,000 shares of stock at par to Michele Kirby for cash.
C) Purchased land and a building from Gretchen Northway in exchange for stock issued at par. The building is mortgaged for $180,000 for 20 years at 6%, and there is accrued interest of $5,200 on the mortgage note at the time of the purchase. It is agreed that the land is to be priced at $60,000 and the building at $225,000 and that Gretchen Northway's equity will be exchanged for stock at par. The corporation agreed to assume responsibility for paying the mortgage note and the accrued interest.

Answer 1

Answer:

A) Journal record for issuing 100,000 shares at par value to Paul Glenn

Dr Cash account 100,000

Cr Common Stock account 100,000

B) Journal record for issuing 3,000 shares at par value to Michele Kirby in exchange for promotional services

Dr Promotional Expenses account 3,000

Cr Common Stock account 3,000

Journal record for issuing 45,000 shares at par value to Michele Kirby

Dr Cash account 45,000

Cr Common Stock account 45,000

C) Journal record for land purchase in exchange for stock and mortgage loan + interests accrued

Dr Land account 60,000

Dr Building account 225,000

Cr Mortgage Loan account 180,000

Cr Interest Payable account 5,00

Cr Common Stock account 99,800