E15-2 E15-5 and E15-6 --Week 4 -- Homework

E15-2 E15-5 and E15-6 --Week 4 -- Homework

E15-2 (Recording the Issuance of Common and Preferred Stock) Kathleen Battle Corporation was orga- nized on January 1, 2014. It is authorized to issue 10,000 shares of 8%, $100 par value preferred stock, and 500,000 shares of no-par common stock with a stated value of $1 per share. The following stock transactions were completed during the first year.

Jan. 10 Issued 80,000 shares of common stock for cash at $5 per share.

Mar.1 Issued 5,000 shares of preferred stock for cash at $108 per share.

Apr. 1 Issued 24,000 shares of common stock for land. The asking price of the land was $90,000; the fair value of the land was $80,000.

May 1 Issued 80,000 shares of common stock for cash at $7 per share.

Aug.1 Issued 10,000 shares of common stock to attorneys in payment of their bill of $50,000 for services rendered in helping the company organize.

Sept.1 Issued 10,000 shares of common stock for cash at $9 per share.

Nov.1 Issued 1,000 shares of preferred stock for cash at $112 per share.

Instructions

Prepare the journal entries to record the above transactions.

E15-5 (Lump-Sum Sales of Stock with Preferred Stock) Dave Matthew Inc. issues 500 shares of $10 par value common stock and 100 shares of $100 par value preferred stock for a lump sum of $100,000.

Instructions

Prepare the journal entry for the issuance when the market price of the common shares is $165 each and market price of the preferred is $230 each. (Round to nearest dollar.)

Prepare the journal entry for the issuance when only the market price of the common stock is known and it is $170 per share.

E15-6 (Stock Issuances and Repurchase) Lindsey Hunter Corporation is authorized to issue 50,000 shares of $5 par value common stock. During 2014, Lindsey Hunter took part in the following selected transactions.

1. Issued 5,000 shares of stock at $45 per share, less costs related to the issuance of the stock totaling $7,000.

2. Issued 1,000 shares of stock for land appraised at $50,000. The stock was actively traded on a national stock exchange at approximately $46 per share on the date of issuance.

3. Purchased 500 shares of treasury stock at $43 per share. The treasury shares purchased were issued in 2010 at $40 per share.

Instructions

(a) Prepare the journal entry to record item 1.

(b) Prepare the journal entry to record item 2.

(c) Prepare the journal entry to record item 3 using the cost method.