13-8 Workplace Products Inc., a wholesaler of office products, was organized on

Question

13-8 Workplace Products Inc., a wholesaler of office products, was organized on July 1 of the current year, with an authorization of 50,000 shares of preferred 2% stock, $40 par and 750,000 shares of $7 par common stock. The following selected transactions were completed during the first year of operations:

Journalize the transactions.

a. Jul. 1. Issued 400,000 shares of common stock at par for cash.

b. Jul. 1. Issued 1,000 shares of common stock at par to an attorney in payment of legal fees for organizing the corporation.

c. Aug 7. Issued 80,000 shares of common stock in exchange for land, buildings, and equipment with fair market prices of $250,000, $400,000, and $70,000, respectively.

For a compound transaction, if an amount box does not require an entry, leave it blank.

d. Sep 20. Issued 25,000 shares of preferred stock at $44 for cash.

For a compound transaction, if an amount box does not require an entry, leave it blank.

Explanation / Answer

Journal entry ;

Date accounts & explanation Debit credit Jul 1 Cash (400000*7) 2800000 Common stock 2800000 (To record issue common stock) Jul 1 Organisation expenses (1000*7) 7000 Common stock 7000 (To record issue common stock for organisation exp) Aug 7 Land 250000 Building 400000 Equipment 70000 Common stock 560000 Paid in capital in excess of par value- Common stock 160000 (To record exchange common stock with Land, building and equipment) Sep 20 Cash (25000*44) 1100000 Preferred stock (25000*40) 1000000 Paid in capital in excess of par value-preferred stock 100000 (To record issue of preferred stock)

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