Tom Smith, a biochemistry professor, organized Biointernational, Inc., earlier this year. The firm will manufacture antibiotics using
Question:
Tom Smith, a biochemistry professor, organized Biointernational, Inc., earlier this year. The firm will manufacture antibiotics using gene splicing technology. Biointernational's charter authorizes the firm to issue 50,000 shares of 10 percent, $60 par preferred stock and 75,000 shares of $12 par common stock. During the year, the firm engaged in the following transactions:
a. Issued 15,000 common shares to Tom Smith in exchange for $250,000 cash.
b. Sold 20,000 common shares to a potential customer for $13 per share.
c. Issued 2,000 shares of preferred stock to a venture capital firm for $65 per share.
d. Gave 75 shares of common stock to Susie Thomas, a local attorney, in exchange for Susie's work in arranging for the firm's incorporation. Susie usually charges $1,000 for an incorporation.
Required:
Prepare a journal entry for each of these transactions.
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Step by Step Answer:
Cornerstones of Financial and Managerial Accounting
ISBN: 978-0324787351
1st Edition
Authors: Rich Jones, Mowen, Hansen, Heitger