Question

An inexperienced accountant for Duran Corporation made the following entries.                          
                          
July   1   Cash 170,000  
               Common Stock           170,000
                   (Issued 25,000 shares of common stock,      
                   par value $6 per share)      

Sept.   1       Common Stock 24,000  
Retained Earnings           16,000  
Cash 40,000
                   (Purchased 4,000 shares issued on July 1 for the      
                   treasury at $10 per share)      
                          
Instructions                          
On the basis of the explanation for each entry, prepare the entry that should have been made for the transactions.                           

Answer 1

Following are the corrected Entries
Date	Accounts Title and Explanation	Debit	Credit
Jul-01	Cash	170,000
	Common Stock		150,000
	Excess Paid in Capital		20,000
	(Issued 25,000 shares of common stock,par value $6 per share)
Sep-01	Treasury Stock	40,000
	Cash		40,000
	(Purchased 4,000 shares issued on July 1 for the treasury at $10 per share)