eBook

Show Me How

Question Content Area

Issuing stock

Professional Products Inc., a wholesaler of office products, was organized on February 5 of the current year, with an authorization of 100,000 shares of preferred 1% stock, $55 par and 300,000 shares of $25 par common stock. The following selected transactions were completed during the first year of operations:

Journalize the transactions.

If an amount box does not require an entry, leave it blank.

Question Content Area

Feb. 5. Issued 155,000 shares of common stock at par for cash.

Date	Account	Debit	Credit
Feb. 5.	CashCommon StockPaid-In Capital in Excess of Par-Common StockPreferred StockRetained EarningsCash	Cash	Cash
	CashCommon StockPaid-In Capital in Excess of Par-Common StockPreferred StockRetained EarningsCommon Stock	Common Stock	Common Stock

Feedback Area

Feedback

What is the company receiving and at what price is the stock being issued?

Question Content Area

Feb. 5. Issued 600 shares of common stock at par to an attorney in payment of legal fees for organizing the corporation.

Date	Account	Debit	Credit
Feb. 5.	Common StockOrganizational ExpensesPaid-In Capital in Excess of Par-Common StockPreferred StockRetained EarningsOrganizational Expenses	Organizational Expenses	Organizational Expenses
	Common StockOrganizational ExpensesPaid-In Capital in Excess of Par-Common StockPreferred StockRetained EarningsCommon Stock	Common Stock	Common Stock

Feedback Area

Feedback

Recall that stock may be issued for reasons other than to receive cash. What are these shares paying for?

Question Content Area

Apr. 9. Issued 22,000 shares of common stock in exchange for land, buildings, and equipment with fair market prices of $103,000, $562,000, and $127,000, respectively.

Date	Account	Debit	Credit
Apr. 9.	Common StockLandPaid-In Capital in Excess of Par-Common StockPaid-In Capital in Excess of Par-Preferred StockPreferred StockLand	Land	Land
	BuildingsCashCommon StockPaid-In Capital in Excess of Par-Common StockPreferred StockBuildings	Buildings	Buildings
	CashCommon StockEquipmentPaid-In Capital in Excess of Par-Common StockPaid-In Capital in Excess of Par-Preferred StockEquipment	Equipment	Equipment
	CashCommon StockEquipmentPaid-In Capital in Excess of Par-Preferred StockPreferred StockCommon Stock	Common Stock	Common Stock
	BuildingsCashLandPaid-In Capital in Excess of Par-Common StockPaid-In Capital in Excess of Par-Preferred StockPaid-In Capital in Excess of Par-Common Stock	Paid-In Capital in Excess of Par-Common Stock	Paid-In Capital in Excess of Par-Common Stock

Feedback Area

Feedback

Record the assets, and increase the common stock account by the par value of the shares. Record any amount above par in a separate paid-in capital equity account.

Recall that shares of stock can be issued to acquire assets. At what value must the preferred stock and common stock accounts be recorded?

Question Content Area

June 14. Issued 15,000 shares of preferred stock at $67 for cash.

Date	Account	Debit	Credit
June 14.	CashCommon StockPaid-In Capital in Excess of Par-Common StockPaid-In Capital in Excess of Par-Preferred StockPreferred StockCash	Cash	Cash
	CashCommon StockLandPaid-In Capital in Excess of Par-Common StockPreferred StockPreferred Stock	Preferred Stock	Preferred Stock
	BuildingsCashCommon StockPaid-In Capital in Excess of Par-Common StockPaid-In Capital in Excess of Par-Preferred StockPaid-In Capital in Excess of Par-Preferred Stock	Paid-In Capital in Excess of Par-Preferred Stock	Paid-In Capital in Excess of Par-Preferred Stock