Question

In: Accounting

Kathleen Battle Corporation was organized on January 1, 2014. It is authorized to issue 10,000 shares...

Kathleen Battle Corporation was organized on January 1, 2014. It is authorized to issue 10,000 shares of 8%, $100 par value preferred stock, and 500,000 shares of no-par common stock with a stated value of $1 per share. The following stock transactions were completed during the first year

Jan 10. Issued 80,000 shares of common stock for cash at $5 per share

Mar 1, Issued 5,000 shares of preferred stock for cash at $108 per share

April 1 Issued 24,000 shares of common stock for land. The asking price of the land was $90,000, the fair value of the land was $80,000

May 1, Issued 80,000 shares of common stock at $7 per share

Aug 1, Issued 10,000 shares of common stock to attorneys in payment of their bill $50,000 for services rendered in helping the company organize

Sept. 1 Issued 10,000 share of common stock for cash $9 per share

Nov. 1 Issued 1,000 shares of preferred stock for cash $112 per share

Instructions

Prepare journal entries to record the above transaction.

Solutions

Expert Solution

Journal entries

Date Account and explanation Debit Credit
Jan 10 Cash (80000*5) 400000
Common stock 80000
Paid in capital in excess of stated value-Common Stock 320000
Mar 1 Cash (5000*108) 540000
Preferred stock 500000
Paid in capital in excess of par value-Preferred stock 40000
Apr 1 Land 90000
Common Stock 24000
Paid in capital in excess of stated value-Common Stock 66000
May 1 Cash (80000*7) 560000
Common Stock 80000
Paid in capital in excess of stated value-Common Stock 480000
Aug 1 Organization expense 50000
Common Stock 10000
Paid in capital in excess of stated value-Common Stock 40000
Sept 1 Cash 90000
Common Stock 10000
Paid in capital in excess of stated value-Common Stock 80000
Nov 1 Cash (1000*112) 112000
Preferred stock 100000
Paid in capital in excess of Par value-Preferred Stock 12000

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