Question

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

Journalize the entries to record the following transactions affecting stockholders’ equity, which were completed during the first year of operations. Refer to the Chart of Accounts for exact wording of account titles.

Jan.	2	Issued 100,000 shares of stock at par to Paul Glenn for cash.
	5	Issued 3,000 shares of stock at par to Michele Kirby for promotional services provided in connection with the organization of the corporation, and issued 45,000 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 $180,000 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 $60,000 and the building at $225,000 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.

Answer 1

	Journal entries:
Date	Accounts title and explanations					Debit $	Credit $
2-Jan	Cash Account Dr.					100000
	Common Stock capital (100000 shares @1)						100000
5-Jan	Promotional expense Account Dr.					3000
	Common Stck capital (3000 shares @1)						3000
	Cash Account Dr.					45000
	Common Stock capital (45000 shares @1)						45000
8-Jan	Land Account Dr.					60,000
	Building Account Dr.					225000
	Mortgage loan						180000
	Interest payable Account						5200
	Common Stock capital						99800