Alpha Sounds Corp., an electric guitar retailer, was organized by Michele Kirby,
ID: 2423179 • Letter: A
Question
Alpha Sounds Corp., an electric guitar retailer, was organized by Michele Kirby, Paul Glenn, and Gretchen Northway. The charter authorized 1,100,000 shares of common stock with a par of $1.
Journalize the entries to record the following transactions affecting stockholders’ equity, which were completed during the first year of operations. Refer to the Chart of Accounts for exact wording of account titles.
Jan.
2
Issued 83,000 shares of stock at par to Paul Glenn for cash.
5
Issued 3,800 shares of stock at par to Michele Kirby for promotional services provided in connection with the organization of the corporation, and issued 45,400 shares of stock at par to Michele Kirby for cash.
8
Purchased land and a building from Gretchen Northway in exchange for stock issued at par. The building is mortgaged for $170,100 for 20 years at 6%, and there is accrued interest of $4,900 on the mortgage note at the time of the purchase. It is agreed that the land is to be priced at $59,800 and the building at $223,600 and that Gretchen Northway’s equity will be exchanged for stock at par. The corporation agreed to assume responsibility for paying the mortgage note and the accrued interest.
CHART OF ACCOUNTS
Alpha Sounds Corp.
General Ledger
ASSETS
110
Cash
120
Accounts Receivable
131
Notes Receivable
132
Interest Receivable
141
Merchandise Inventory
145
Office Supplies
151
Prepaid Insurance
181
Land
191
Building
192
Accumulated Depreciation-Building
LIABILITIES
210
Accounts Payable
221
Notes Payable
226
Interest Payable
231
Cash Dividends Payable
236
Stock Dividends Distributable
241
Salaries Payable
261
Mortgage Note Payable
EQUITY
311
Common Stock
312
Paid-In Capital in Excess of Par-Common Stock
315
Treasury Stock
321
Preferred Stock
322
Paid-In Capital in Excess of Par-Preferred Stock
331
Paid-In Capital from Sale of Treasury Stock
340
Retained Earnings
351
Cash Dividends
352
Stock Dividends
390
Income Summary
Journalize the entries to record the transactions. Refer to the Chart of Accounts for exact wording of account titles.
PAGE 1
JOURNAL
DATE
DESCRIPTION
POST. REF.
DEBIT
CREDIT
1
2
3
4
5
6
7
8
9
10
11
REVENUE
410
Sales
610
Interest Revenue
EXPENSES
510
Cost of Merchandise Sold
515
Credit Card Expense
520
Salaries Expense
531
Advertising Expense
532
Delivery Expense
533
Selling Expenses
534
Rent Expense
535
Insurance Expense
536
Office Supplies Expense
537
Organizational Expenses
561
Depreciation Expense-Building
590
Miscellaneous Expense
710
Interest Expense
Jan.
2
Issued 83,000 shares of stock at par to Paul Glenn for cash.
5
Issued 3,800 shares of stock at par to Michele Kirby for promotional services provided in connection with the organization of the corporation, and issued 45,400 shares of stock at par to Michele Kirby for cash.
8
Purchased land and a building from Gretchen Northway in exchange for stock issued at par. The building is mortgaged for $170,100 for 20 years at 6%, and there is accrued interest of $4,900 on the mortgage note at the time of the purchase. It is agreed that the land is to be priced at $59,800 and the building at $223,600 and that Gretchen Northway’s equity will be exchanged for stock at par. The corporation agreed to assume responsibility for paying the mortgage note and the accrued interest.
CHART OF ACCOUNTS
Alpha Sounds Corp.
General Ledger
ASSETS
110
Cash
120
Accounts Receivable
131
Notes Receivable
132
Interest Receivable
141
Merchandise Inventory
145
Office Supplies
151
Prepaid Insurance
181
Land
191
Building
192
Accumulated Depreciation-Building
LIABILITIES
210
Accounts Payable
221
Notes Payable
226
Interest Payable
231
Cash Dividends Payable
236
Stock Dividends Distributable
241
Salaries Payable
261
Mortgage Note Payable
EQUITY
311
Common Stock
312
Paid-In Capital in Excess of Par-Common Stock
315
Treasury Stock
321
Preferred Stock
322
Paid-In Capital in Excess of Par-Preferred Stock
331
Paid-In Capital from Sale of Treasury Stock
340
Retained Earnings
351
Cash Dividends
352
Stock Dividends
390
Income Summary
Journalize the entries to record the transactions. Refer to the Chart of Accounts for exact wording of account titles.
PAGE 1
JOURNAL
DATE
DESCRIPTION
POST. REF.
DEBIT
CREDIT
1
2
3
4
5
6
7
8
9
10
11
REVENUE
410
Sales
610
Interest Revenue
EXPENSES
510
Cost of Merchandise Sold
515
Credit Card Expense
520
Salaries Expense
531
Advertising Expense
532
Delivery Expense
533
Selling Expenses
534
Rent Expense
535
Insurance Expense
536
Office Supplies Expense
537
Organizational Expenses
561
Depreciation Expense-Building
590
Miscellaneous Expense
710
Interest Expense
Explanation / Answer
DATE DESCRIPTION POST.REF. DEBIT CREDIT 1 Jan. 2 Cash 83000 2 Common Stock 83000 3 Jan. 5 Organisational Expenses 3800 4 Cash 45400 5 Common Stock 49200 6 Jan. 8 Land 59800 7 Building 223600 8 Common Stock 283400 9 Jan. 8 Mortgage Note Payable 170100 10 Interest Payable 4900 11 Cash 175000
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