King Corporation began operations in January 2018. The charter authorized the fo

Question

King Corporation began operations in January 2018. The charter authorized the following share capital: King Corporation began operations in January 2018. The charter authorized the following share capital: Preferred shares: 9 percent, $24 par value, authorized 47,000 shares Common shares: no par value, authorized 177,000 shares. During 2018, the following transactions occurred in the order given: a. Sold and issued 23,500 common shares to each of the three organizers. Collected $9 cash per share from two of the organizers, and received a plot of land with a small building on it in full payment for the shares of the third organizer and issued the shares immediately. Assume that 30 percent of the non- cash payment received applies to the building b. Sold and issued 6,700 preferred shares at $24 per share. Collected the cash and issued the shares c. Sold and issued 2,700 preferred shares at $24 and 2,700 common shares at $12 per share. Collected d. The operating results at the end of 2018 were as follows: mmediately the cash and issued the shares immediately Revenues Expenses, including income taxes $ 365,000 222,500 Required 1. Prepare the journal entries to record each of these transactions and to close the accounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Explanation / Answer

Transaction

Accounts Title & Explanation

Debit

Credit

(a).

Cash (47000 shares * $9)

$423000

Land ($211500 * 0.70)

$148050

Building ($211500 * 0.30)

$63450

     Common shares

$634500

(For recording issue of common shares)

(b).

Cash (6700 * $24)

$160800

      Preferred shares

$160800

(For recording sale of preferred shares)

(c).

Cash ($32400 + $64800)

$97200

     Common shares (2700 * $12)

$32400

     Preferred shares (2700 * $24)

$64800

(For recording sale of common and preferred shares)

(d).

Revenues

$365000

     Income summary

$365000

(For transferring revenues to income summary)

Income summary

$222500

     Expenses

$222500

(For transferring expenses to income summary)

Income summary

$142500

     Retained earnings

$142500

(For transferring profits to retained earnings)

Transaction

Accounts Title & Explanation

Debit

Credit

(a).

Cash (47000 shares * $9)

$423000

Land ($211500 * 0.70)

$148050

Building ($211500 * 0.30)

$63450

     Common shares

$634500

(For recording issue of common shares)

(b).

Cash (6700 * $24)

$160800

      Preferred shares

$160800

(For recording sale of preferred shares)

(c).

Cash ($32400 + $64800)

$97200

     Common shares (2700 * $12)

$32400

     Preferred shares (2700 * $24)

$64800

(For recording sale of common and preferred shares)

(d).

Revenues

$365000

     Income summary

$365000

(For transferring revenues to income summary)

Income summary

$222500

     Expenses

$222500

(For transferring expenses to income summary)

Income summary

$142500

     Retained earnings

$142500

(For transferring profits to retained earnings)

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