Question

Beauty Island Corporation began operations on April 1 by issuing 60,000 shares of $5 par value common stock for cash at $13 per share. On April 19, it issued 2,000 shares of common stock to attorneys in settlement of their bill of $27,500 for orga- nization costs. In addition, Beauty Island issued 1,000 shares of $1 par value preferred stock for $6 cash per share. Journalize the issuance of the common and preferred shares, assuming the shares are not publicly traded.

Answer 1

Apr 1 Bank A/c (60000*13) dr. 780000

To common stock application and allotment A/c or Share app & allotment A/c 780000

Apr 1 Common stock application and allotment A/c or Share app & allotment A/c dr. 780000

To S. premium A/c (60000*8) 480000

To Common stock capital A/c or Share Capital A/c (60000*5) 300000

Apr 19 Expense Payable A/c dr. 27500

To S. premium A/c (b/f) 17500

To Common stock capital A/c or Share Capital A/c (2000*5) 10000

Apr 19 Bank A/c (1000*6) dr. 6000

To Pref. Share application and allotment A/c 6000

Apr 1 Pref. Share application and allotment A/c     dr. 6000

To S. premium A/c (1000*5) 5000

To Common stock capital A/c or Share Capital A/c (1000*1) 1000