Question

Alpha Sounds Corp., an electric guitar retailer, was organized by Michele Kirby, Paul Glenn, and Gretchen Northway. The charter authorized 1,500,000 shares of common stock with a par of $1.

Journalize the entries to record the following transactions affecting stockholders’ equity, were completed during the first year of operations. Refer to the Chart of Accounts for exact wording of account titles. Enter the January 5 transaction as two separate journal entries.

Jan.

2

Issued 84,000 shares of stock at par to Paul Glenn for cash.

5

Issued 3,500 shares of stock at par to Michele Kirby for promotional services provided in connection with the organization of the corporation, and issued 44,300 shares of stock at par to Michele Kirby for cash.

8

Purchased land and a building from Gretchen Northway in exchange for stock issued at par. The building is mortgaged for $178,400 for 20 years at 6%, and there is accrued interest of $5,200 on the mortgage note at the time of the purchase. It is agreed that the land is to be priced at $58,100 and the building at $226,700 and that Gretchen Northway’s equity will be exchanged for stock at par. The corporation agreed to assume responsibility for paying the mortgage note and the accrued interest.

Journalize the entries to record the transactions. Refer to the Chart of Accounts for exact wording of account titles. Enter the January 5 transaction as two separate journal entries.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3
4
5
6
7
8
9
10
11

Answer 1

DATE	DESCRIPTION	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
2-Jan	Cash	$84,000		$84,000	0	$84,000
	Common stock		$84,000
(being issue of common stock)
5-Jan	Organization expenses	$3,500		44300		$47,800
	CAsh	44300				($3,500)
	Common stock		$47,800
(being issue of common stock for cash and organizational services)
8-Jan
3	Land	$58,100		$284,800	183600	$101,200
	Building	226700
	Mortgage Notes payable		178400
	Interest payable		5200
	Common stock (bal fog)		$101,200
If any doubt please comment