5. Presented below is information related to Wyrick Company Th e company is gran

Question

5. Presented below is information related to Wyrick Company Th e company is granted 12,000 shares of common stock are issued to the founders o a share for the common stock. a charter that authorizes issuance of 15,000 shares of 100 par value preferred stock and 40,000 shares of no-par common sto land valued by the board of directors at $400,000. The board establishes a s 4. The company issues 200 shares of common stock to its atto 2. the corporation for at $110 per share. osts associated with starting the company. At that time, the common stock was selling at 560 per share. Instructions Prepare the general journal entries necessary to record these transactions.

Explanation / Answer

The following are the required entries:

Transaction no. General description Debit Credit 1 NO entry necessary 2 Land a/c $400,000 ...........To Common stock a/c $120,000 ............To Paid in capital in excess of stated value $280,000 (land is valued at $400,000, 12,000 common shares @$10 stated value => $120,000 , balance credited to paid in capital in excess of stated value) 3 Cash a/c $660,000 ..........To Preferred stock a/c $600,000 ...........To Paid in capital in excess of par - Preferred stock a/c $60,000 (face value of preferred stock $100 , total issued $100 * 6,000 shares =>$600,000 , $10 per share in excess of par => $10 * 6,000 =>$60,000) 4 Organisation expense a/c $12,000 ..........To Common stock a/c $2,000 ...........To Paid in capital in excess of stated value $10,000 (common stock credited with stated value i.e $10 *200=>$2,000, balance credited to paid in capital in excess of stated value i.e ($60- 10=>$50 * 200 =>$10,000)).

Related Questions

Navigate

• Browse (All)
• Browse 5
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.