Problem 18-1 (Algo) Various stock transactions; correction of journal entries [LO18-4]

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 102 million common shares, $1 par per share.

Required:

Prepare the appropriate journal entries to record each transaction.

Jan.9Issued 40 million common shares for $12 per share.Mar.11Issued 4,100 shares in exchange for custom-made equipment. McCollum's shares have traded recently on the stock exchange at $12 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).

($ in millions)DateGeneral JournalDebitCreditSept. 1Common stock2Retained earnings32Cash34Dec. 1Cash18Common stock1Gain on sale of previously issued shares17

Required:

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