Spangler Corporation received a charter allowing it to issue 15,000 shares of $1

Question

Spangler Corporation received a charter allowing it to issue 15,000 shares of $100 par value preferred stock and 18,000 shares of $20 par value common stock. Spangler entered into the following stock transactions during the past year. Journalize each transaction. Issued 11,000 shares of common stock to the corporate founders in exchange for land and a building valued by the board of directors at $70,000 and $215,000 respectively. Sold 9,000 shares of preferred stock for $115 per share. Purchased 700 shares of common stock for $72 per share. Resold 400 shares of common stock held as treasury stock for $65 per share.

Explanation / Answer

Land a/c Dr $70000

Building a/c dr $215000

To Common Stock a/c $220000

To Paid in capital in of common stock excess of par value $65000

(Being shares issued in exchange of land and building and the excess of par value credited to paid up capital)

Cash a/c Dr $1035000

To Preferred Stock a/c $900000

To Paid up capital of preferred stock in excess of par value $135000

(Being shares issued for cash in excess of par value)

Treasury Stock a/c Dr $50400

Cash a/c Dr $50400

(Being shares repurchase @ $72)

Cash a/c Dr $26000

Retained earnings a/c Dr $2800

To Treasury stock $28800

(Being 400 shares reissued @65 but it was purchased in $72 so it is debited to ratained earnings if there would have been paid in capital for treasury stock than that would have debited)

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