Professional products inc., a wholesaler of office products waas organized on Fe

Question

Professional products inc., a wholesaler of office products waas organized on Feb.5 of the current year, with an authorization of 50,000 shares of preferred 2% stock, $40 par and 1,000,000 shares of $8 par common stock. The following selected transactions were complleted during the first year of operations: Feb 5 issued 600,000 shares of common stock at par for cash Feb 5 issued 1,500 shares of common stock at par to an attorney in payment of legal fees for organizing the corporation. Apr 9 issued 45,000 shares of common stock in exchange for land, buildings, and equipment with fair market prices of $100,000, $310,000, and 85,000 respectively. June 14 issued 30,000 shares of preferred stock at $53 for cash.

Explanation / Answer

JOURNAL ENTRIES DATE ACCOUNTS TITLE AND EXPLANATIONS DEBIT $ CREDIT $ 5-Feb Cash Account Dr. 4,800,000     Common Stock capital 4,800,000 5-Feb Organisation expense Dr. 12000       Common Stock Capital 12000 9-Apr Land Dr. 100,000 Building Dr. 310,000 Equipment Dr. 85,000      Common Stock capital 495000 14-Jun Cash Account Dr. 1,590,000     2% prefered Stock capital 1,200,000     Additional Paid in capital 390,000

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