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20-4ASTOCK ISSUANCE (NONCASH ASSETS, SUBSCRIPTION, AND TREASURY

STOCK) Smith & Cline had the following stock transactions during the year:

(a) Issued 5,000 shares of common stock with a $5 par value in exchange for real

estate (land) with a fair market value of $27,500.

(b) Issued 7,500 shares of common stock with a $5 par value and $6 fair market

value in exchange for a building with an uncertain fair market value.

(c) Received subscriptions for 10,000 shares of $6 par common stock for $65,000.

(d) Received subscriptions for 5,000 shares of $6 par common stock for $28,000.

(e) Received a payment of $30,000 on the stock subscription in transaction (c).

(f) Received the balance in full for the stock subscription in transaction (c) and

issued the stock.

(g) Received the balance in full for the stock subscription in transaction (d) and

issued the stock.

(h) Purchased 1,000 shares of its own $6 par common stock for $7 a share ($7,000).

(i) Sold 500 shares of the treasury stock in transaction (h) for $7.50 a share.

(j) Sold 500 shares of the treasury stock in transaction (h) for $6.75 a share.

Prepare general journal entries to record the transactions, identifying each by letter.

20-5ASTOCKHOLDERS' EQUITY SECTION After closing its books on December 31, Pro

Parts' stockholders' equity accounts had the following balances:

Common stock subscriptions receivable $ 5,000

Common stock, $5 par, 12,000 shares 60,000

Preferred stock, $10 par, 4%, 4,000 shares 40,000

Common stock subscribed, $5 par, 3,000 shares 15,000

Paid-in capital in excess of par-common stock 4,000

Retained earnings 35,000

Prepare the stockholders' equity section of the balance sheet.

20-7ASTATED VALUE, COMMON AND PREFERRED STOCK, AND NONCASH

ASSETS Kris Kraft Stores had the following stock transactions during the year:

(a) Issued 4,000 shares of no-par common stock with a stated value of $10 per share

for $40,000 cash.

(b) Issued 6,000 shares of no-par common stock with a stated value of $8 per share

for $50,000 cash.

(c) Issued 5,000 shares of no-par, 6% preferred stock with a stated value of $15 per

share for $75,000 cash.

(d) Issued 3,000 shares of no-par, 6% preferred stock with a stated value of $20 per

share for $58,000 cash.

(e) Issued 10,000 shares of $5 par common stock for land with a fair market value

of $50,000.

(f) Issued 10,000 shares of $8 par common stock with a $9 fair market value for a

building with an uncertain fair market value.

(g) Issued 8,000 shares of $50 par, 8% preferred stock for land with a fair market

value of $405,000.

REQUIRED

Prepare general journal entries to record the transactions, identifying each transaction

by letter.

Review questions

1.Briefly describe five advantages of the corporate form of business organization. Describe two disadvantages.

10. How is treasury stock usually shown on the balance sheet?

11. How is paid-in capital from sale of treasury stock usually shown on the balance sheet?

Student Name: Review Question 1 Review Question 10 Review Question 11 Exercise 20-4A General Journal Date Description Post Ref. Debit Page 1 Credit Problem 20-7A General Journal Date Description Post Ref. Debit Page 1 Credit Exercise 20-5A Stockholders' Equity