Sally Corporation is authorized to issue 1,000,000 shares of $3 par value common

Question

Sally Corporation is authorized to issue 1,000,000 shares of $3 par value common stock.

During 2015, its first year of operation, the company has the following stock transactions.

Jan 1 paid the state $5000 for incorporation fees Jan 15 Issued 500,000 shares of stock at $6 per share

Jan 30 Attorneys for the company accepted 500 shares of common stock as payment for legal services rendered in helping the company incorporate. The legal services are estimated to have a value of $7000

July 2 Issued 100,000 shares of stock for land. The land had an asking price of $900,000. The stock is currently selling on a national exchange at $8 per share

Sept 5 Purchased 15,000 shares of common stock for the treasury at $8 per share

Dec 6 Sold 11,000 shares of the treasury stock at $11 per share

Indicate the accounts that are increased and/or decreased in the above transactions for Sally Corporation.

Explanation / Answer

The accounts that are increased or decreased in the above transactions for Sally Corporation Common Stock Additional Paid in Capital Cash Incorporation Fees Legal fees Land Paid state for Incorporation fees ($5,000) $5,000 Issued 500,000 Shares of stock @ $6 per share $1,500,000 $1,500,000 $3,000,000 500 Shares issued for legal fees $1,500 $5,500 $7,000 100,000 shares issued for land $300,000 $500,000 $800,000 Purchased 15000 shares of common stock for the Treasury @$8 per share ($45,000) ($75,000) ($120,000) Sold 11000 shares of treasury stock @ $11 per share $33,000 $88,000 $121,000

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