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 $8 per share.
		13		Issued 41,000 common shares to attorneys in exchange for legal services.
		13		Sold 81,000 of its common shares and 7,000 preferred shares for a total of $1,045,000.
Nov.		15		Issued 430,000 of its common shares in exchange for equipment for which the cash price was known to be $4,028,000.

Required:
Prepare the appropriate journal entries to record each transaction. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)

Answer 1

Answer
the following are the required journal entries:
Date	General Journal	Debit	Credit
Feb-12	cash a/c	$     18,000,000		2000000*9
	......To common stock		$         2,000,000	2000000*1
	......To paid in capital in excess of par		$       16,000,000
Feb-13	Legal expense	$          328,000		41000*8
	..........To common stock		$              41,000	41000*1
	..........To paid in capital in excess of par		$            287,000
Feb-13	cash a/c	$       1,045,000
	.........To common stock		$              81,000	81000*1
	.........To paid in capital in excess of par, common stock		$            567,000	81000*8+81000*1
	...........To preferred stock		$            350,000	7000*50
	..........TO paid in capital in excess of par , preferred stock (balancing figure)		$              47,000
Nov-15	Equipment a/c	$       4,028,000
	............To common stock		$            430,000	430000*1
	............To paid in capital inexcess of par common stock		$         3,598,000