Answer:
Feb.12
Dr Cash 30,000,000
Cr Common stock 3,000,000
Cr Paid in capital in excess of par- Common stock 27,000,000
Feb.13
Dr Legal expenses 360,000
Cr Common stock 36,000
Cr Paid in capital in excess of par- Common stock 324,000
Feb.13
Dr Cash $1,020,000
Cr Common stock 77,000
Cr Paid in capital in excess of par- Common stock 693,000
Cr Preferred stock 225,000
Cr Paid in capital in excess of par- Preferred stock 25,000
Feb.15
Dr Equipment $3,928,000
Cr Common stock 405,000
Cr Paid in capital in excess of par- Common stock 3,523,000
Explanation:
Preparation of the appropriate journal entries
Feb.12
Dr Cash (3 million * $10) 30,000,000
Cr Common stock (3 million * $1) 3,000,000
Cr Paid in capital in excess of par- Common stock 27,000,000
(30,000,000-3,000,000)
(Being To record the sale of 3 million common shares at $10 per share of $1 par value)
Feb.13
Dr Legal expenses (36,000 share * $10) 360,000
Cr Common stock (36,000 share * $1) 36,000
Cr Paid in capital in excess of par- Common stock 324,000
(360,000-36,000)
(Being To record issue of common shares in exchange of legal expenses)
Feb.13
Dr Cash $1,020,000
Cr Common stock (77,000*$1) 77,000
Cr Paid in capital in excess of par- Common stock 693,000
[(77,000*$10)- (77,000*$1)]
Cr Preferred stock (4,500*$50) 225,000
Cr Paid in capital in excess of par- Preferred stock 25,000
[$1,020,000-( 77,000-693,000-225,000)
(Being To record sale of common shares and preferred shares)
Feb.15
Dr Equipment $3,928,000
Cr Common stock (405,000*$1) 405,000
Cr Paid in capital in excess of par- Common stock 3,523,000
($3,928,000-405,000)
(To record issue of 405,000 shares $1 in exchange for equipment)
