On February 3 the Teel Corporation enters into a subscription contract with several subscribers for 5,000 shares

Question:

On February 3 the Teel Corporation enters into a subscription contract with several subscribers for 5,000 shares of $10 par common stock at a price of $16 per share. The contract requires a down payment of 25%, with the remaining balance to be paid on May 3. The stock will be issued to each subscriber upon full payment.

Required

Prepare journal entries to record the following:

1. The February 3 receipt of the down payment and signing of the contract.

2. The May 3 receipt of the remaining balance from subscribers to 4,000 shares. The market price is currently $17 per share.

3. The default of a subscriber to 1,000 shares. These shares are sold on the open market for $17 per share on May 4, and the down payment is returned to the subscriber.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Corporation
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