Question

Professional Products Inc., a wholesaler of office products, was organized on February 5 of the current year, with an authorization of 25,000 shares of preferred 2% stock, $100 par and 550,000 shares of $10 par common stock. The following selected transactions were completed during the first year of operations:

Feb.	5	Issued 227,000 shares of common stock at par for cash.
	5	Issued 700 shares of common stock at par to an attorney in payment of legal fees for organizing the corporation.
Apr.	9	Issued 66,000 shares of common stock in exchange for land, buildings, and equipment with fair market prices of $153,300, $472,700 and $166,000 respectively.
June	14	Issued 19,300 shares of preferred stock at $106 for cash.

Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles.

Answer 1

Prepare journal entries as shown below:

Date	Accounts Title and Explanation	PR.NO	Debit	Credit
Feb-07	Cash		2,270,000
	Common Stock			2,270,000
	(To record the issue of common stock at par)
Feb-07	Organisational Expenses(700 * $10)		7,000
	Common Stock			7,000
	(To record the issue of common stock
	i payment of legal fee)
Apr-09	Land		153,300
	Building		472,700
	Equipment		166,000
	Common Stock			660,000
	Paid in Capital in Excess of Par -Common Stock			132,000
	(To record the issue of common stock in exchange
	for land ,buildings, and equipment with fair market .
	prices)
June-14	Cash(19,300 * $106)		2,045,800
	Preferred Stock (19,300 *$10)			1,930,000
	Paid in Capital in Excess of Par - Preferred Stock.			115,800
	(19,300 * $6)