Question

Exercise 15-1 During its first year of operations, Vaughn Corporation had the following transactions pertaining to its common stock. Jan. 10 Issued 83,100 shares for cash at $6 per share. Mar. 1 Issued 5,000 shares to attorneys in payment of a bill for $35,500 for services rendered in helping the company to incorporate. July 1 Issued 32,000 shares for cash at $8 per share. Sept. 1 Issued 64,300 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

Solution a:

Journal Entries - Vaughn Corporation
Date	Particulars	Debit	Credit
10-Jan	Cash Dr (83100*$6)	$498,600.00
	To Common stock (83100*$5)		$415,500.00
	To Paid in capital in excess of Par value - Common stock (83100*$1)		$83,100.00
	(To record issue of common stock)
1-Mar	Organization expense Dr	$35,500.00
	To Common stock (5000*$5)		$25,000.00
	To Paid in capital in excess of Par value - Common stock		$10,500.00
	(To record issue of common stock as consideration for service availed)
1-Jul	Cash Dr (32000*$8)	$256,000.00
	To Common stock (32000*$5)		$160,000.00
	To Paid in capital in excess of Par value - Common stock (32000*$3)		$96,000.00
	(To record issue of common stock)
1-Sep	Cash Dr (64300*$10)	$643,000.00
	To Common stock (64300*$5)		$321,500.00
	To Paid in capital in excess of Par value - Common stock (64300*$5)		$321,500.00
	(To record issue of common stock)

Solution b:

Journal Entries - Vaughn Corporation
Date	Particulars	Debit	Credit
10-Jan	Cash Dr (83100*$6)	$498,600.00
	To Common stock (83100*$2)		$166,200.00
	To Paid in capital in excess of stated value - Common stock (83100*$4)		$332,400.00
	(To record issue of common stock)
1-Mar	Organization expense Dr	$35,500.00
	To Common stock (5000*$2)		$10,000.00
	To Paid in capital in excess of stated value - Common stock		$25,500.00
	(To record issue of common stock as consideration for service availed)
1-Jul	Cash Dr (32000*$8)	$256,000.00
	To Common stock (32000*$2)		$64,000.00
	To Paid in capital in excess of stated value - Common stock (32000*$6)		$192,000.00
	(To record issue of common stock)
1-Sep	Cash Dr (64300*$10)	$643,000.00
	To Common stock (64300*$2)		$128,600.00
	To Paid in capital in excess of Par value - Common stock (64300*$8)		$514,400.00
	(To record issue of common stock)