A corporation was formed on January 1 and was authorized to issue 400,000 shares

Question

A corporation was formed on January 1 and was authorized to issue 400,000 shares of common stock at $2 par value. During the first year of operations, the company earned $325,000 and the following transactions occurred: 1. Sold 150,000 shares of common stock in an initial public offering of $15 per share 2. Repurchased 35,000 shares of previously common stock at $20 to be held as treasury shares. 3. Resold 5,000 of the treasury stock at $22 per share. 4. Market price of the outstanding shares on December 31 was $25 Required: Prepare the stockholders

Explanation / Answer

A corporation was formed on January 1. The corporate charter authorized 110,000 shares of $10 par value common stock. During the first month of operation, the corporation issued 250 shares to its attorneys in payment of a $3,500 charge for drawing up the articles of incorporation. The entry to record this transaction would include:
C.A debit to Organization Expenses for $3,500.

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