Various Journal Entries Sapp Company is authorized to issue 20,000 shares of no-

Question

Various Journal Entries

Sapp Company is authorized to issue 20,000 shares of no-par, $5 stated-value common stock and 5,000 shares of 9%, $100 par preferred stock. It enters into the following transactions:

(1) Accepts a subscription contract to 7,000 shares of common stock at $42 per share and receives a 30% down payment.

(2) Collects the remaining balance of the subscription contract and issues the common stock.

(3) Acquires a building by paying $23,000 cash and issuing 2,000 shares of common stock and 600 shares of preferred stock. Common stock is currently selling at $46 per share; preferred stock has no current market value. The building is appraised at $180,000.

(4) Sells 1,000 shares of common stock at $45 per share.

(5) Sells 900 shares of preferred stock at $112 per share.

(6) Declares a two-for-one stock split on the common stock, reducing the stated value to $2.50 per share.

Prepare journal entries to record the preceding transactions.

(1)

(2) Receive Cash

(2) Issue stock

(3)

(4)

(5)

Explanation / Answer

Dr Cr. 1) Cash 88200 Subscription receivable 205800              Common stock subscribed 35000              Additional paid in capital on common stock 259000 2) Cash 205800             Subscription receivable 205800 Common stock subscribed 35000         common stock , $5 stated value 35000 3) Building 180000     common stock 5 stated value 10000    Additional paid in capital on common stock 82000    Preferred stock 100 par 60000    Additional paid in capital on prefered stock 5000    Cash 23000 4) Cash 45000        common stock 5 stated value 5000        Additional paid in capital on common stock 40000 5) Cash 100800         Preferred stock 100 par 90000         Additional paid in capital on pref stock 10800 6) The company decalred a two for one stock split on the common stock , reducing the stated value from 5.00 to 2.5 per share and increasing the share issued from 10000 to 20000

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