Question

Problem 142 Presented below is information related to Wyrick Company: 1. The company is granted a charter that authorizes issuance of 15,000 shares of $100 par value preferred stock and 40,000 shares of no-par common stock. 2. 9,000 shares of common stock are issued to the founders of the corporation for land valued by the board of directors at $290,000. The board establishes a stated value of $10 a share for the common stock. 3. 6,300 shares of preferred stock are sold for cash at $110 per share. 4. The company issues 160 shares of common stock to its attorneys for costs associated with starting the company. At that time, the common stock was selling at $65 per share. Prepare the general journal entries necessary to record these transactions.

Answer 1

Solution:

Journal entries
S.no.	Particulars	Debit	Credit
1	No journal entry required.
2	Land Dr	$2,90,000
	To Common stock (9000*$10)		$90,000
	To Paid in Capital in excess of Stated Value- Common Stock		$2,00,000
3	Cash Dr (6300*$110)	$6,93,000
	To Preferred stock (6300*$100)		$6,30,000
	To Paid in Capital in excess of Par Value- Preferred Stock		$63,000
4	Organization expenses Dr (160*$65)	$10,400
	To Common stock (2000*$10)		$10,400