Question

Selected Stock Transactions

Alpha Sounds Corp., an electric guitar retailer, was organized by Michele Kirby, Paul Glenn, and Gretchen Northway. The charter authorized 600,000 shares of common stock with a par of $1. The following transactions affecting stockholders' equity were completed during the first year of operations.

Journalize the entries to record the transactions.

If an amount box does not require an entry, leave it blank.

a. Issued 9,000 shares of stock at par to Paul Glenn for cash.

	Cash
	Common Stock

b. (1) Issued 500 shares of stock at par to Michele Kirby for promotional services provided in connection with the organization of the corporation, and (2) issued 15,000 shares of stock at par to Michele Kirby for cash.

(1)	Organizational Expenses
	Common Stock
(2)	Cash
	Common Stock

c. Purchased land and a building from Gretchen Northway in exchange for stock issued at par. The building is mortgaged for $479,000 for 20 years at 7% and there is accrued interest of $4,000 on the mortgage note at the time of the purchase. The corporation agreed to assume responsibility for paying the mortgage note and accrued interest. It is agreed that the land is to be valued at $306,000 and the building at $715,000, and that Gretchen Northway will be issued stock at par.

	Land
	Building
	Interest Payable
	Mortgage Note Payable
	Common Stock

Answer 1

a
Cash	9000
Common Stock		9000
b1
Organizational Expenses	500
Common Stock		500
b2
Cash	15000
Common Stock		15000
c
Land	306000
Building	715000
Interest Payable		4000
Mortgage Note Payable		479000
Common Stock		538000