Problem:
(Correcting Entries for Equity Transactions)
Pistons Inc. recently hired a new accountant with extensive experience in accounting for partnerships. Because of the pressure of the new job, the accountant was unable to review what he had learned earlier about corporation accounting. During the first month, he made the following entries for the corporation's capital stock.
May 2 Cash 192,000
Capital Stock 192,000
(Issued 12,000 shares of $5 par value common stock at $16 per share)
10 Cash 600,000
Capital Stock 600,000
(Issued 10,000 shares of $30 par value preferred stock at $60 per share)
15 Capital Stock 15,000
Cash 15,000
(Purchased 1,000 shares of common stock for the treasury at $15 per share)
31 Cash 8,500
Capital Stock 5,000
Gain on Sale of Stock 3,500
(Sold 500 shares of treasury stock at $17 per share)
Instructions:
On the basis of the explanation for each entry, prepare the entries that should have been made for the capital stock transactions.