Question

DeLong Corporation was organized on January 1, 2017. It is authorized to issue 10,000 shares of 8%, $100 par value preferred stock, and 500,000 shares of no-par common stock with a stated value of $2 per share. The following stock transactions were completed during the first year. Journalize the following transactions
Jan.10 Issued 80,000 shares of common stock for cash at $4 per share.
Mar.1 Issued 5,000 shares of preferred stock for cash at $105 per share.
Apr. 1 Issued 24,000 shares of common stock for land. The asking price of the land was $90,000. The fair value of the land was $85,000.
May1 Issued 80,000 shares of common stock for cash at $4.5 per share.
Aug.1 Issued 10,000 shares of common stock to attorneys in payment of their bill of $30,000 for services performed in helping the company organize.
Sept.1 Issued 10,000 shares of common stock for cash at $5 per share.
Nov.1 Issued 1,000 shares of preferred stock for cash at $109 per share.

Answer 1

Answer:

Journal Entry

Jan 10 Debit Bank $320,000 Credit Common stock Account $160,000 Credit Paid_in_Excess Account $160,000

Mar 01 Debit Bank $525,000 Credit Preferred stock Account $500,000 Credit Paid-in-excess preferred stock $25,000

Apr 01 Debit Land $90,000 Credit Common stock $90,000

May 01 Debit Bank $360,000 Credit Common Stock $160,000 Credit Paid-in-excess $200,000

Aug 01 Debit Attorney Fees $30,000 Credit Common Stock $30,000

Sep 01 Debit Bank $50,000 Credit Common Stock $20,000 Credit Paid-in-excess $30,000

Nov 01 Debit Bank $109,000 Credit Preferred stock $100,000 Credit Cash paid-in-excess preferred $9,000

Explanation:

April 01 The purchase of land has no cash actually received for issuing shares or paid for the land therefore the full asking price is for share issued hence no cash paid in excess.

Attorney fees have same effect as the land above, there is no cash paid in excess.