Question

 Nash Corporation is authorized to Issue 50,000 shares of $5 par value common stock. During 2017, Nash took part In the following selected transactions.

 1. Issued 5,100 shares of stock at $43 per share, less costs related to the issuance of the stock totaling $6,900.

 2. Issued 1,000 shares of stock for land appraised at $50,000. The stock was actively traded on a national stock exchange at approximately $44 per share on the date of issuance.

 3. Purchased 550 shares of treasury stock at $41 per share. The treasury shares purchased were issued in 2013 at $38 per share.

 (a) Prepare the journal entry to record item 1.

 (b) Prepare the journal entry to record item 2.

 (c) Prepare the journal entry to record Item 3 using the cost method.

Answer 1

(a) The journal entry to record item 1 is as follows:

Date	Particulars	Debit ($)	Credit ($)
	Cash Account [(5,100 * $43) - $6,900]	212,400
	Common stock-$5 par value		25,500
	Paid-in-capital in excess of par (193,800 - 6,900)		186,900
	(To record the issue of common stock for cash)

Note: There is two way to treat the stock issuance costs the first method tells that debit the issuance cost to paid-in-capital in excess of par and second method tells that treat issuance cost as organization cost and write-off this cost within 40 years.

(b) The journal entry to record item 2 is as follows:

Date	Particulars	Debit ($)	Credit ($)
	Land Account	50,000
	Common stock-$5 par value (1,000 * $5)		5000
	Paid-in-capital in excess of par		45,000
	(To record the issue of common stock for land)

Note: Land is recorded at its appraised value.

(c) The journal entry to record item 3 is as follows:

Date	Particulars	Debit ($)	Credit ($)
	Treasury stock (550 shares * $41)	22,550
	Cash account		22,550
	(To record the purchase treasury stock under cost method)