Question

Presented below is information related to Crane Company:

1.		The company is granted a charter that authorizes issuance of 15,000 shares of $100 par value preferred stock and 40,000 shares of no-par common stock.
2.		7,500 shares of common stock are issued to the founders of the corporation for land valued by the board of directors at $280,000. The board establishes a stated value of $10 a share for the common stock.
3.		5,500 shares of preferred stock are sold for cash at $110 per share.
4.		The company issues 130 shares of common stock to its attorneys for costs associated with starting the company. At that time, the common stock was selling at $55 per share.

Prepare the general journal entries necessary to record these transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

Solution:

Transaction	Account Titles and Explanation	Debit	Credit
1	No Entry	0
			0
2	Land	$ 280,000
	Common Stock [7500*10]		$        75,000
	Paid in capital in excess of stated value-Common stock		$      205,000
	(To record Common Stock Issued)
3	Cash [5500*110]	$ 605,000
	Preferred Stock[ 5500*100]		$      550,000
	Paid in capital in excess of par value-Preferred stock		$        55,000
	( To record issue of preferred stock for cash)
4	Organisation Expense [130*55]	$      7,150
	Common Stock [130*10]		$          1,300
	Paid in capital in excess of stated value-Common stock		$          5,850
	(To record Common Stock Issued)