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In: Accounting

Gilliam Corporation recently hired a new accountant with extensive experience in accounting for partnerships. Because of...

Gilliam Corporation recently hired a new accountant with extensive experience in accounting for partnerships. Because of the pressure of the new job, the accountant was unable to review his textbooks on the topic of corporation accounting. During the first month, the accountant made the following entries for the corporation’s capital stock.

May 2   Cash   201,600    
       Capital Stock       201,600
         (Issued 14,400 shares of $11 par value common stock at $14 per share)        
             
10   Cash   892,800    
       Capital Stock       892,800
         (Issued 14,400 shares of $52 par value preferred stock at $62 per share)        
             
15   Capital Stock   47,600    
       Cash       47,600
         (Purchased 2,800 shares of common stock for the treasury at $17 per share)        
             
31   Cash   9,216    
       Capital Stock       5,120
       Gain on Sale of Stock       4,096
         (Sold 512 shares of treasury stock at $18 per share)        


On the basis of the explanation for each entry, prepare the entry that should have been made for the capital stock transactions. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.)

Date

Account Titles and Explanation

Debit

Credit

May 2May 10May 15May 31

 

 

May 2May 10May 15May 31

 

 

May 2May 10May 15May 31

 

May 2May 10May 15May 31

 

 

Solutions

Expert Solution

ENTRY SHOULD HAVE BEEN MADE :

DATE ACCOUNTS & EXPLANATION DEBIT CREDIT
MAY 2 CASH A/C (14400*14) 201600
COMMON STOCK A/C (14400*11) 158400
ADDITIONAL PAID IN CAPITAL-COMMON STOCK (14400*3) 43200
( TO RECORD ISSUE OF COMMON STOCK)
MAY 10 CASH A/C (14400*62) 892800
PREFERED STOCK A/C (14400*52) 748800
ADDITIONAL PAID IN CAPITAL-PREFERED STOCK (14400*10) 144000
( TO RECORD ISSUE OF PREFERED STOCK )
MAY 15 TREASURY STOCK A/C (2800*17) 47600
CASH A/C 47600
( TO RECORD REPURCHASED TREASURY STOCK)
MAY 31 CASH A/C (512*18) 9216
   TRESURY STOCK A/C (512*17) 8704
ADDITIONAL PAID IN CAPITAL A/C 512
( TO RECORD SALE OF TREASURY STOCK)

ekkarill92 answered 2 years ago
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