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Q23E_1

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Horngren'S Financial And Managerial Accounting
Found in: Page 712

Short Answer

Journalizing issuance of stock and preparing the stockholders’ equity section of the balance sheet

The charter for ASAP-TV, Inc. authorizes the company to issue 100,000 shares of $5, no-par preferred stock and 500,000 shares of common stock with $1 par value. During its start-up phase, ASAP-TV completed the following transactions:

Sep. 6 Issued 550 shares of common stock to the promoters who organized the corporation, receiving cash of $16,500.

12 Issued 400 shares of preferred stock for cash of $23,000.

14 Issued 1,500 shares of common stock in exchange for land with a market value of $17,000.

Requirements

1. Record the transactions in the general journal.

Cash is debited by $16,500,common stock credited by $550and Paid- in capital in excess of par is credited by $15,950.

Cash is debited by $23,000, preferred stock credited by $2,000and Paid- in capital in excess of par is credited by $21,000.

Land is debited by $17,000, common stock credited by $1,500 andPaid- in capital in excess of par is credited by $15,500.

See the step by step solution

Step by Step Solution

Step 1: Basic calculation

Step 2: Journal entries

Date

Transaction

Debit

Credit

Sep 6

Cash

$16,500

Common stock

$550

Paid- in capital in excess of par

$15,950

To record issue of common stock

Sep 12

Cash

$23,000

Preferred stock

$2,000

Paid- in capital in excess of par

$21,000

To record issue of preferred stock

Sep 14

Land

$17,000

Common stock

$1,500

Paid- in capital in excess of par

$15,500

To record issue of common stock in exchange of asset

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