Ava School of Learning obtained a charter at the start of the year that authoriz

Question

Ava School of Learning obtained a charter at the start of the year that authorized 50,000 shares of no-par common stock and 20,000 shares of preferred stock, par value $10. During the year, the following selected transactions occurred: a. Collected $47 cash per share from four individuals and issued 5,700 shares of common stock to each. b. Issued 6,700 shares of common stock to an outside investor at $47 cash per share. c. Issued 8,700 shares of preferred stock at $18 cash per share. Required: 1. Prepare the journal entries indicated for each of these transactions.

Explanation / Answer

Date /no. Account title Debit credit a cash    [47*5700] 267900 common stock    [47*5700] 267900 [common stock issued] b cash      [47 * 6700] 314900 common stock    [47*6700] 314900 [common stock issued for cash ] c Cash      [8700*18] 156600 Preferred stock     [8700*10] 87000 Paid in capital in excess of par     [8700*8] 69600 [preferred stock issued ]

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