Answer:
<h2>Legacy Rocks Inc.</h2>
a) Journal Entries:
October 31:
Debit Cash Account $7,200,000
Credit Common Stock $4,000,000
Credit Additional Paid-in Capital- Common Stock $3,200,000
To record the issue of 400,000 shares of $10 par common stock at $18.
November 19:
Debit Cash Account $4,000,000
Credit Preferred Stock $3,750,000
Credit Additional Paid-in Capital - Preferred Stock $250,000
To record the issue of 50,000 shares of preferred stock, $75 par at $80.
b) Stockholders' Equity Section of the balance sheet as of June 30:
Authorized Share Capital
Issued Share Capital-Common Stock 400,000
shares at $10 par $4,000,000
Additional Paid-in Capital- Common Stock 3,200,000
Treasury Stock (90,000)
Issued Share Capital - Preferred Stock 50,000
shares at $75 par 3,750,000
Additional Paid-in Capital - Preferred Stock 250,000
Explanation:
Journal entries are used to debit and credit accounts for each transaction that occurs on a daily basis. They are the initial entries made in the books of account. From the journal entries, the accounts are posted to the general ledger where they are summarized for the period.
