Question

During its first year of operations, Sheridan Corporation had the following transactions pertaining to its common stock. Jan. 10 Issued 84,900 shares for cash at $6 per share. Mar. 1 Issued 5,000 shares to attorneys in payment of a bill for $37,600 for services rendered in helping the company to incorporate. July 1 Issued 33,100 shares for cash at $8 per share. Sept. 1 Issued 63,200 shares for cash at $10 per share.

(a) Prepare the journal entries for these transactions, assuming that the common stock has a par value of $5 per share.

(b) Prepare the journal entries for these transactions, assuming that the common stock is no-par with a stated value of $2 per share.

Answer 1

(a) Prepare the journal entries for these transactions, assuming that the common stock has a par value of $5 per share.

Date	account and explanation	debit	credit
Jan 10	Cash (84900*6)	509400
	Common Stock (84900*5)		424500
	Paid in capital in excess of par value-Common Stock		84900
	(To record common stock)
Mar 1	Organisation fees	37600
	Common Stock (5000*5)		25000
	Paid in capital in excess of par value-Common Stock		12600
	(To record common stock)
July 1	Cash (33100*8)	264800
	Common Stock		165500
	Paid in capital in excess of par value-Common Stock		99300
	(To record common stock)
Sep 1	Cash	632000
	Common Stock		316000
	Paid in capital in excess of par value-Common Stock		316000
	(To record common stock)

(b) Prepare the journal entries for these transactions, assuming that the common stock is no-par with a stated value of $2 per share.

Date	account and explanation	debit	credit
Jan 10	Cash (84900*6)	509400
	Common Stock (84900*2)		169800
	Paid in capital in excess of stated value-Common Stock		339600
	(To record common stock)
Mar 1	Organisation fees	37600
	Common Stock (5000*2)		10000
	Paid in capital in excess of stated value-Common Stock		27600
	(To record common stock)
July 1	Cash (33100*8)	264800
	Common Stock		66200
	Paid in capital in excess of stated value-Common Stock		198600
	(To record common stock)
Sep 1	Cash	632000
	Common Stock		126400
	Paid in capital in excess of stated value-Common Stock		505600
	(To record common stock)