Overland Corporation is authorized to issue 250,000 shares of $1 par value commo

Question

Overland Corporation is authorized to issue 250,000 shares of $1 par value common stock. During 2017, Overland Corporation took part in the following selected transactions.
? Issued 55,000 shares of stock at $76 per share, less costs related to the issuance of the stock totaling $27,000.
? Issued 10,000 shares of stock for land appraised at $815,000. The stock was actively traded on a national stock exchange at approximately $78 per share on the date of issuance.
? Purchased 6,000 shares of treasury stock at $74 per share. The treasury shares purchased were issued in 2006 at $46 per share.
Instructions
(a) Prepare the journal entry to record item 1.
(b) Prepare the journal entry to record item 2.
(c) Prepare the journal entry to record item 3 using the cost method.

Explanation / Answer

Solution:

Journal Entries - Overland Corporation Event Particulars Debit Credit a Cash Dr (55000*$76 - $27,000) $4,153,000.00       To common stock $55,000.00       To Paid in capital in excess of par - Common stock $4,098,000.00 (To record issue of shares) b Land Dr $780,000.00       To common stock $10,000.00       To Paid in capital in excess of par - Common stock $770,000.00 (To record purchase of land by issuing shares) c Treasury Stock Dr $444,000.00       To Cash $444,000.00 (To record purchase of own shares)

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