Alpha Sounds Corp., an electric guitar retailer, was organized by Michele Kirby, Paul Glenn, and Gretchen Northway. The charter authorized 1,000,000 shares ofcommon stockwith aparof
Alpha Sounds Corp., an electric guitar retailer, was organized by Michele Kirby, Paul Glenn, and Gretchen Northway. The charter authorized 1,000,000 shares ofcommon stockwith aparof $1. Journalize the entries to record the following transactions affectingstockholders equity, which were completed during the first year of operations. Refer to the Chart of Accounts for exact wording of account titles.
Jan. | 2 | Issued 100,000 shares of stock at par to Paul Glenn for cash. |
5 | Issued 3,000 shares of stock at par to Michele Kirby for promotional services provided in connection with the organization of the corporation, and issued 45,000 shares of stock at par to Michele Kirby for cash. |
8 | Purchased land and a building from Gretchen Northway in exchange for stock issued at par. The building is mortgaged for $180,000 for 20 years at 6%, and there is accrued interest of $5,200 on the mortgage note at the time of the purchase. It is agreed that the land is to be priced at $60,000 and the building at $225,000 and that Gretchen Northways equity will be exchanged for stock at par. The corporation agreed to assume responsibility for paying the mortgage note and the accrued interest. |
Chart of Accounts
CHART OF ACCOUNTS |
Alpha Sounds Corp. |
General Ledger |
ASSETS | 110 | Cash | 120 | Accounts Receivable | 131 | Notes Receivable | 132 | Interest Receivable | 141 | Merchandise Inventory | 145 | Office Supplies | 151 | Prepaid Insurance | 181 | Land | 191 | Building | 192 | Accumulated Depreciation-Building | LIABILITIES | 210 | Accounts Payable | 221 | Notes Payable | 226 | Interest Payable | 231 | Cash Dividends Payable | 236 | Stock Dividends Distributable | 241 | Salaries Payable | 261 | Mortgage Note Payable | EQUITY | 311 | Common Stock | 312 | Paid-In Capital in Excess of Par-Common Stock | 315 | Treasury Stock | 321 | Preferred Stock | 322 | Paid-In Capital in Excess of Par-Preferred Stock | 331 | Paid-In Capital from Sale of Treasury Stock | 340 | Retained Earnings | 351 | Cash Dividends | 352 | Stock Dividends | 390 | Income Summary | | REVENUE | 410 | Sales | 610 | Interest Revenue | EXPENSES | 510 | Cost of Merchandise Sold | 515 | Credit Card Expense | 520 | Salaries Expense | 531 | Advertising Expense | 532 | Delivery Expense | 533 | Selling Expenses | 534 | Rent Expense | 535 | Insurance Expense | 536 | Office Supplies Expense | 537 | Organizational Expenses | 561 | Depreciation Expense-Building | 590 | Miscellaneous Expense | 710 | Interest Expense | |
Journal Journalize the entries to record the transactions. Refer to the Chart of Accounts for exact wording of account titles. PAGE 1 JOURNAL
1.2
Biscayne Bay Water Inc. bottles and distributes spring water. On May 14 of the current year, Biscayne Bay Water Inc. reacquired 23,500 shares of itscommon stockat $75 per share. On September 6, Biscayne Bay Water Inc. sold 14,000 of the reacquired shares at $81 per share. The remaining 9,500 shares were sold at $72 per share on November 30. Required: A. | Journalize the transactions of May 14, September 6, and November 30. Refer to the Chart of Accounts for exact wording of account titles. |
B. | What is the balance inPaid-In Capitalfrom Sale of Treasury Stock on December 31 of the current year? |
C. | Where will the balance in Paid-In Capital from Sale of Treasury Stock be reported on the balance sheet? |
D. | For what reasons might Biscayne Bay Water Inc. have purchased the treasury stock? |
Chart of Accounts CHART OF ACCOUNTS |
Biscayne Bay Water Inc. |
General Ledger |
ASSETS | 110 | Cash | 120 | Accounts Receivable | 131 | Notes Receivable | 132 | Interest Receivable | 141 | Merchandise Inventory | 145 | Office Supplies | 151 | Prepaid Insurance | 181 | Land | 193 | Equipment | 194 | Accumulated Depreciation-Equipment | LIABILITIES | 210 | Accounts Payable | 221 | Notes Payable | 226 | Interest Payable | 231 | Cash Dividends Payable | 236 | Stock Dividends Distributable | 241 | Salaries Payable | 261 | Mortgage Note Payable | EQUITY | 311 | Common Stock | 312 | Paid-In Capital in Excess of Par-Common Stock | 315 | Treasury Stock | 321 | Preferred Stock | 322 | Paid-In Capital in Excess of Par-Preferred Stock | 331 | Paid-In Capital from Sale of Treasury Stock | 340 | Retained Earnings | 351 | Cash Dividends | 352 | Stock Dividends | 390 | Income Summary | | REVENUE | 410 | Sales | 610 | Interest Revenue | EXPENSES | 510 | Cost of Merchandise Sold | 515 | Credit Card Expense | 520 | Salaries Expense | 531 | Advertising Expense | 532 | Delivery Expense | 533 | Selling Expenses | 534 | Rent Expense | 535 | Insurance Expense | 536 | Office Supplies Expense | 537 | Organizational Expenses | 562 | Depreciation Expense-Equipment | 590 | Miscellaneous Expense | 710 | Interest Expense | |
Journal A. Journalize the transactions of May 14, September 6, and November 30. Refer to the Chart of Accounts for exact wording of account titles. PAGE 10 JOURNAL Final Questions B. What is the balance inPaid-In Capitalfrom Sale of Treasury Stock on December 31 of the current year? C. Where will the balance in Paid-In Capital from Sale of Treasury Stock be reported on the balance sheet? D. For what reasons might Biscayne Bay Water Inc. have purchased the treasury stock?Check all that apply. For reissuance to employees as a bonus according to stock purchase agreements. To support the market price of the stock. The company wishes to increase the par value of its stock. To provide shares for resale to employees. The company wishes to receive more of its own dividends.