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 9 million common shares, $1 par per share, and 3 million preferred shares, $50 par per share.

Feb.		12		Sold 2 million common shares, for $10 per share.
		13		Issued 48,000 common shares to attorneys in exchange for legal services.
		13		Sold 72,000 of its common shares and 5,000 preferred shares for a total of $1,000,000.
Nov.		15		Issued 385,000 of its common shares in exchange for equipment for which the cash price was known to be $3,848,000.

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.)

• 1. Sold 2 million common shares, for $10 per share.

• 2. Issued 48,000 common shares to attorneys in exchange for legal services.

• 3. Sold 72,000 of its common shares and 5,000 preferred shares for a total of $1,000,000.

• 4. Issued 385,000 of its common shares in exchange for equipment for which the cash price was known to be $3,848,000.

Answer 1

Answer
		Debit	Credit
Feb-12	Cash	$      20,000,000		2000000*10
	Common Stock		$        2,000,000	2000000*1
	Paid in Capital-excess of par,Common		$      18,000,000
Feb-13	Legal expenses	$           480,000		48000*10
	Common Stock		$             48,000	48000*1
	Paid in Capital-excess of par,Common		$           432,000
Feb-13	Cash	$        1,000,000
	Common Stock		$             72,000	72000*1
	Paid in Capital-excess of par,Common		$           648,000	72000*(10-1)
	Preferred Stock		$           250,000	5000*50
	Paid in Capital-excess of par,Preferred		$             30,000
Nov-15	Property,Plant and Equipment	$        3,848,000
	Common Stock		$           385,000
	Paid in Capital-excess of par,Common		$        3,463,000