Question

Workplace Products Inc., a wholesaler of office products, was organized on July 1 of the current year, with an authorization of 50,000 shares of preferred 2% stock, $40 par and 750,000 shares of $7 par common stock. The following selected transactions were completed during the first year of operations:
a. Jul. 1. Issued 400,000 shares of common stock at par for cash.
b. Jul. 1. Issued 1,000 shares of common stock at par to an attorney in payment of legal fees for organizing the corporation.
c. Aug 7. Issued 80,000 shares of common stock in exchange for land, buildings, and equipment with fair market prices of $250,000, $400,000, and $70,000, respectively.
d. Sep 20. Issued 25,000 shares of preferred stock at $44 for cash.
Required:
1. Journalize the transactions.

Answer 1

Answer: Please refer to Explanation

Explanation:

Jul 1

DR Cash (400,000 * 7) $2,800,000

CR Common Stock $2,800,000

(To record common stock issued)

July 1

DR Organisation Expense (1,000*7) $7,000

CR Common Stock $7,000

(To record Common Stock Issue)

Aug 7

DR Land $250,000

DR Building $400,000

DR Equipment $70,000

CR Common Stock $560,000

CR Paid in capital excess of par value - Common stock $160,000

( To record Exchange of common stock for PPE)

Sep 20

DR Cash (25,000 * 44) $1,100,000

CR Preferred Stock (25,000*40) $1,000,000

Paid in Excess Capital of Par Value Preferred Shares $100,000

(To record issue of Preference Shares)

If you need any clarification do comment.