QUESTION 12 Moses Corporation was organized early in 2016. The articles of incor

Question

QUESTION 12 Moses Corporation was organized early in 2016. The articles of incorporation authorize 60,000 shares of $100 par value, 10% cumulative preferred stock and 800,000 shares of $5 par value common stock The following transactions affecting stockholders' equity were completed during the first year 1. Issued 2,000 shares of preferred stock at par value as payment in exchange for legal services 2. Issued 10,000 shares of common stock at $20 per share and 1,000 shares of preferred stock at par 3. Exchanged 100,000 shares of common stock for land with an appraised value of $400,000 and a building with an appraised value of $650,000 4. Declared the required cash dividend on preferred stock and a $2 per share dividend on common stock 5. Closed the $450,000 credit balance in the Income Summary Account. Required: a. Prepare joumal entries to record these transactions (10 Marks)

Explanation / Answer

S.no. Accounts title and explanations Debit $ Credit $ 1 Organisation expense Dr. 200,000      Preferred Stock Account 200,000 2 Cash Account Dr. 300,000      Preferred Stock Account (1000*100) 100,000      Common Stock Account (10,000shares @5) 50000      Paid in capital-Common Stock 150,000 3 Land Account Dr. 400,000 Building Account Dr. 650,000      Common Stock Account (100,000 shares @5) 500,000      Paid in Capital-Common Stock 550,000 4 Retained earning Account Dr. 250,000     Dividend payable-Common Stock (110,000 shares @2) 220,000     Dividend payable-Prefered Stock (3000 shares @10) 30,000 5 Income Summary Dr. 450,000      Retained earnings 450,000

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