Novak Corp. recently hired a new accountant with extensive experience in account

Question

Novak Corp. 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 what he had learned earlier about corporation accounting. During the first month, he made the following entries for the corporation’s capital stock.

On the basis of the explanation for each entry, prepare the entries 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 2 Cash 94,900     Capital Stock 94,900        (Issued 7,300 shares of $10 par value common stock at $13 per share) 10 Cash 520,000     Capital Stock 520,000        (Issued 10,000 shares of $17 par value preferred stock at $52 per share) 15 Capital Stock 9,680     Cash 9,680        (Purchased 880 shares of common stock for the treasury at $11 per share)

Explanation / Answer

ans)

May 2 Cash (7300 x 13) 94900

Common stock (7300 X 10) 73000

Paid-in Capital in Excess of Par Value--Common Stock (94900 - 73000) 21900

May 10 Cash (10000 X 52) 520000

Preferred stock (10,000 X 17) 170000

   Paid-in Capital in Excess of Par Value—Preferred Stock 350000

(10,000 X (52-17)

May 15 Treasury stock (880 X 11) 9680

Cash 9680

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