Question

The New England Patriots sell deflated footballs, and were organized on March 1 of the current year with an authorization of 25,000 shares of preferred 2% stock, $100 par and 500,000 shares of $10 par common stock. The following selected transactions were completed during the first year of operations:

March 1: Issued 220,000 shares of common stock at par for cash.

1: Issued 500 shares of common stock at par to an attorney in payment of legal fees for organizing the corporation.

May 31: Issued 70,000 shares of common stock in exchange for land, buildings and equipment with fair market prices of $150,000, $560,000 and $165,000 respectively.

July 1: Issued 18,000 shares of preferred stock at $110 for cash.

Journalize the transactions.

Answer 1

March 1:

1) Dr- Cash 2,200,000

Cr- Common Stock 2,200,000

(Issued 220,000 shares of common stock at $10 par value)

2) Dr- Legal Fees 5,000

Cr- Common Stock 5,000

(Issued 500 shares of common stock at $10 par value in exchange for the payment of Legal fees)

May 31 :

1) Dr- Land 150,000

Dr- Buildings 560,000

Dr- Equipment 165,000

Cr- Common Stock 700,000

Cr- Additional Paid in Capital 175,000

(Issued 70,000 shares of common stock in exchange for the Land, Building and Equipment with market value of 150,000 , 560,000 and 165,000 respectively)

July 1:

1) Dr- Cash 1,980,000

Cr- Preferred Stock 1,800,000

Cr- Additional Paid in Capital 180,000

(Issued 18,000 shares of preferred stock at $110 ($100 par value))