Question

During its first year of operations, Eastern Data Links Corporation entered into the following transactions relating to shareholders’ equity. The articles of incorporation authorized the issue of 8 million common shares, $1 par per share, and 1 million preferred shares, $50 par per share.

Feb.		12		Sold 2 million common shares, for $9 per share.
		13		Issued 40,000 common shares to attorneys in exchange for legal services.
		13		Sold 80,000 of its common shares and 4,000 preferred shares for a total of $945,000.
Nov.		15		Issued 380,000 of its common shares in exchange for equipment for which the cash price was known to be $3,688,000.

Required:
Prepare the appropriate journal entries to record each transaction.

Answer 1

Feb. 12	Cash	18000000		=2000000*9
	Common Stock		2000000
	Paid-In Capital - Excess of Par-Common stock		16000000
Feb. 13	Legal Expense	360000		=40000*9
	Common Stock		40000
	Paid-In Capital - Excess of Par-Common stock		320000
Feb. 13	Cash	945000
	Common Stock		80000
	Paid-In Capital - Excess of Par-Common stock		640000	=80000*(9-1)
	Preferred Stock		200000	=4000*50
	Paid-In Capital - Excess of Par, Preferred stock		25000
Nov 15	Property, Plant and Equipment	3688000
	Common Stock		380000
	Paid-In Capital - Excess of Par-Common stock		3308000