1. (Recording the Issuance of Common and Preferred Stock) Kathleen Battle Corporation was organized on January 1, 2014. It is authorized to issue 10,000 shares of 8%, $100 par value preferred stock, and 500,000 shares of no par common stock with a stated value of $1 per share. The following stock transactions were completed during the first year.
Jan. 10 Mar. 1 Apr. 1
May 1 Aug. 1
Sept. 1 Nov. 1
Issued 80,000 shares of common stock for cash at $5 per share. Issued 5,000 shares of preferred stock for cash at $108 per share. Issued 24,000 shares of common stock for land. The asking price of the land was $90,000; the fair value of the land was $80,000. Issued 80,000 shares of common stock for cash at $7 per share. Issued 10,000 shares of common stock to attorneys in payment of their bill of $50,000 for services rendered in helping the company organize. Issued 10,000 shares of common stock for cash at $9 per share. Issued 1,000 shares of preferred stock for cash at $112 per share.
Instructions
Prepare the journal entries to record the above transactions.
2. (Lump-Sum Sales of Stock with Preferred Stock) Dave Matthew Inc. issues 500 shares of $10 par value common stock and 100 shares of $100 par value preferred stock for a lump sum of $100,000.
Instructions
Prepare the journal entry for the issuance when the market price of the common shares is $165 each and market price of the preferred is $230 each. (Round to nearest dollar.)
Prepare the journal entry for the issuance when only the market price of the common stock is known and it is $170 per share.
3. (Stock Issuances and Repurchase) Lindsey Hunter Corporation is authorized to issue 50,000 shares of $5 par value common stock. During 2014, Lindsey Hunter took part in the following selected transactions.
Issued 5,000 shares of stock at $45 per share, less costs related to the issuance of the stock totaling $7,000. 2. Issued 1,000 shares of stock for land appraised at $50,000. The stock was actively traded on a national stock exchange at approximately $46 per share on the date of issuance. 3. Purchased 500 shares of treasury stock at $43 per share. The treasury shares purchased were issued in 2010 at $40 per share.
Instructions
(a) Prepare the journal entry to record item 1. (b) Prepare the journal entry to record item 2. (c) Prepare the journal entry to record item 3 using the cost method.