Part A

During its first year of operations, the McCollum Corporation entered into the following transactions relating to shareholders' equity. The corporation was authorized to issue 100 million common shares, $1 par per share.

Required:

What are the appropriate journal entries to record each transaction.

Jan.9 Issued 40 million common shares for $20 per share.

Mar. 11 Issued 5,000 shares in exchange for custom-made equipment. McCollum's shares have traded recently on the stock exchange at $20 per share.

Part B

A new staff accountant for the McCollum Corporation recorded the following journal entries during the second year of operations. McCollum retires shares that it reacquires (restores their status to that of authorized but unissued shares).

Jan 12. Land 2

Paid-in capitol - donation of land 2

Sept 1. Common Stock 2

Retained Earnings 48

Cash 50

Dec 1 Cash 26

Common stock 1

Gain on sale of previously issued shares 25

Required:

What is the journal entries that should have been recorded for each of the transactions.