Question

Lodi Company is authorized to issue 100,000 shares of no-par, $6 stated-value common stock and 10,000 shares of 9%, $100 par preferred stock. It enters into the following transactions on December 31:

1.	Accepts a subscription contract to 7,000 shares of common stock at $41 per share and receives a 30% down payment.
2.	Collects the remaining balance of the subscription contract and issues the common stock.
3.	Acquires a building by paying $2,000 cash and issuing 3,000 shares of common stock and 900 shares of preferred stock. Common stock is currently selling at $45 per share; preferred stock has no current market value. The building is appraised at $1,310,000.
4.	Sells 1,000 shares of common stock at $48 per share.
5.	Sells 900 shares of preferred stock at $110 per share.
6.	Declares a three-for-one stock split on the common stock, reducing the stated value to $2.00 per share.

Required:

Prepare the journal entries to record the preceding transactions.

CHART OF ACCOUNTS
Lodi Company
General Ledger
ASSETS 111 Cash 121 Accounts Receivable 141 Inventory 152 Prepaid Insurance 172 Building 181 Equipment 189 Accumulated Depreciation LIABILITIES 211 Accounts Payable 231 Salaries Payable 250 Unearned Revenue 261 Income Taxes Payable EQUITY 305 Preferred Stock 311 Common Stock 312 Common Stock Subscribed 318 Additional Paid-in Capital on Preferred Stock 320 Additional Paid-in Capital on Common Stock 326 Subscriptions Receivable 331 Retained Earnings	REVENUE 411 Sales Revenue EXPENSES 500 Cost of Goods Sold 511 Insurance Expense 512 Utilities Expense 521 Salaries Expense 532 Bad Debt Expense 540 Interest Expense 541 Depreciation Expense 559 Miscellaneous Expenses 910 Income Tax Expense

Prepare journal entries to record the transactions on December 31. Additional Instructions

PAGE 1PAGE 2 (PLEASE FILL OUT BOTH PAGES)!!!!!!!!!!!!!!!!!!!! (12 ENTRIES FOR BOTH)

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7
8

Answer 1

By the given information:

Journal entries in the books of LODI COMPANY:

DATE/NO	PARTICULARS	DEBIT $	CREDIT $
1.	Cash dr	86100
	Subscription receivable dr	200900
	To common stock subscribed (7000 * 6)		42000
	To additional paid in capital		245000
	(Accepts a subscription contract to 7,000 shares of common stock at $41 per share and receives a 30% down payment)
2.	Cash dr	200900
	To Subscription receivable		200900
	(being cash received on subscription contract)
	Common stock subscribed (7000 * 6)	42000
	To Common stock		42000
	(issues the common stock.)
3.	Building Dr	1310000
	To common stock (3000 * 6)		18000
	To additional paid in capital on common stock		117000
	To preferred stock(900 * 100)		90000
	To additional paid in capital on preferred stock		1083000
	To cash		2000
	Acquires a building by paying $2,000 cash and issuing 3,000 shares of common stock and 900 shares of preferred stock. Common stock is currently selling at $45 per share; preferred stock has no current market value. The building is appraised at $1,310,000)
4.	Cash Dr	48000
	To common stock		6000
	To additional paid in capital		42000
	(Sells 1,000 shares of common stock at $48 per share.)
5.	Cash Dr	99000
	To preferred stock		90000
	To additional paid in capital		9000
	(Sells 900 shares of preferred stock at $110 per share.)
6.	no journal entry is made for a stock split.