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-BARSIC- [3]
3 years ago
13

During its first year of operations, Eastern Data Links Corporation entered into the following transactions relating to sharehol

ders’ equity. The articles of incorporation authorized the issue of 6 million common shares, $1 par per share, and 3 million preferred shares, $50 par per share.
Prepare the appropriate journal entries to record each transaction:
Feb. 12 Sold 2 million common shares for $9 per share
Cash (2 million x $9) 18 000 000
All Rights Received
Cash (2 million
x $9) 18,000,000
Common stock (2 million x $1) 2,000,000
PIC in excess of par-C/S (2 million x $8) 16,000,000
Feb. 13 Issued 40,000 common shares to attorneys in exchange for legal services
Legal expense (40,000 x $9) 360,000
Common stock (40,000 x $1) 40,000
PIC in excess of par-C/S (40,000 x $8) 320,000
Business
1 answer:
gizmo_the_mogwai [7]3 years ago
5 0

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)

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