ssuing stock

Professional Products Inc., a wholesaler of office products, was organized on February 5 of the current year, with an authorization of 75,000 shares of preferred 2% stock, $55 par and 400,000 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.

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Feb. 5. Issued 115,000 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

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

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Feb. 5. Issued 500 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

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

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Apr. 9. Issued 17,500 shares of common stock in exchange for land, buildings, and equipment with fair market prices of $82,000, $447,000, and $101,000, 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

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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?

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June 14. Issued 20,000 shares of preferred stock at $64 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

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