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

Feb.		12		Sold 2 million common shares, for $10 per share.
		13		Issued 35,000 common shares to attorneys in exchange for legal services.
		13		Sold 76,000 of its common shares and 4,000 preferred shares for a total of $1,015,000.
Nov.		15		Issued 400,000 of its common shares in exchange for equipment for which the cash price was known to be $3,908,000.

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.)

Answer 1

Eastern Data Links Corporation
Genral Journal
Date	Account Titles & Explanations	Debit	Credit	Working
Feb 12	Cash/Bank	Dr	$    20,000,000		2,000,000 * 10
	Common Stock	Cr		$      2,000,000	2,000,000 * 1
	Paid in capital in excess of Par - common	Cr		$   18,000,000	2,000,000 * 9
	(sold 2 million common share for $ 10 each)
Feb 13	Legal Services Expense	Dr	$          350,000		35,000 *10
	Common Stock	Cr		$            35,000	35,000 *1
	Paid in capital in excess of Par - common	Cr		$         315,000	35,000 *9
	(issued 35,000 common shares in exchange of legal services)
Feb 13	Cash/Bank	Dr	$      1,015,000		given
	Common Stock	Cr		$            76,000	76,000 * 1
	Paid in capital in excess of Par - common	Cr		$         684,000	76,000 * 9
	Preferred Stock	Cr		$         200,000	4,000 * 50
	Paid in capital in excess of Par - Preferred	Cr		$            55,000	balancing figure
	(sold 76,000 common shares and 4,000 preferred shares)
Nov 15	Equipment	Dr	$      3,908,000		Cash price
	Common Stock	Cr		$         400,000	400,000 * 1
	Paid in capital in excess of Par - common	Cr		$      3,508,000	balancing figure
	(issued 400,000 common shares in exchange of equipment)