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DeLong Corporation was organized on January 1, 2017. It is authorized to issue 13,000 shares of 8%, $100 par value preferred stock, and 526,000 shares of no-par common stock with a stated value of $3 per share. The following stock transactions were completed during the first year.
Jan. 10 Issued 84,500 shares of common stock for cash at $6 per share.
Mar. 1 Issued 5,150 shares of preferred stock for cash at $105 per share.
Apr. 1 Issued 24,000 shares of common stock for land. The asking price of the land was $91,000. The fair value of the land was $80,500.
May 1 Issued 83,500 shares of common stock for cash at $4.75 per share.
Aug. 1 Issued 11,000 shares of common stock to attorneys in payment of their bill of $38,500 for services performed in helping the company organize.
Sept. 1 Issued 12,000 shares of common stock for cash at $7 per share.
Nov. 1 Issued 2,000 shares of preferred stock for cash at $109 per share.
Journalize the transactions. (Record journal entries in the order presented in the problem.)
Journalize Common and Preferred Stock Transactions
When most businesses are first organized or established, they include what is called Articles of Incorporation which are filed with the Secretary of State of the state in which the business is incorporated. These Articles specify the capital structure of the corporation, including preferred stock and how many shares of preferred stock may be issued and the par value of each share of preferred stock. These Articles also specify the number of common shares which the corporation may issue, and either the par value, no-par value, or the stated value per share of common stock.

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Answer:

DeLong Corporation

Journal Entries:

Jan. 10: Debit Cash $507,000

Credit Common stock $253,500

Credit Additional Paid-in Capital- Common stock $253,500

To record the issue of 84,500 shares at $6 per share.

Mar. 1: Debit Cash $540,750

Credit Preferred stock $515,000

Credit Additional Paid-in Capital - Preferred stock $25,750

To record the issue of 5,150 shares at $105 per share.

Apr. 1 Debit Land $80,500

Debit Loss on Purchase of Land $10,500

Credit Common stock $72,000

Credit Additional Paid-in Capital- Common stock $19,000

To record the issue of 24,000 shares for land.

May 1: Debit Cash $396,625

Credit Common stock $250,500

Credit Additional Paid-in Capital- Common stock $146,125

To record the issue of 11,000 shares at $4.75 per share.

Aug. 1: Debit Attorney Fees $38,500

Credit Common stock $33,000

Credit Additional Paid-in Capital- Common stock $5,500

To record the issue of 11,000 shares for attorney's fees.

Sept. 1: Debit Cash $84,000

Credit Common stock $36,000

Credit Additional Paid-in Capital- Common stock $48,000

To record the issue of 12,000 shares at $7 per share.

Nov. 1: Debit Cash $218,000

Credit Preferred stock $200,000

Credit Additional Paid-in Capital-Preferred stock $18,000

To record the issue of 2,000 shares at $109 per share.

Explanation:

a) Data and Analysis:

January 1, 2017, Authorized Shares:

13,000 shares of 8%, $100 par value Preferred Stock

526,000 shares of no-par Common Stock with a stated value of $3 per share

Jan. 10: Cash $507,000 Common stock $253,500 Additional Paid-in Capital $253,500

Mar. 1: Cash $540,750 Preferred stock $515,000 Additional Paid-in Capital $25,750

Apr. 1 Land $91,000 Common stock $72,000 Additional Paid-in Capital $19,000

May 1: Cash $396,625 Common stock $250,500 Additional Paid-in Capital $146,125

Aug. 1: Attorney Fees $38,500 Common stock $33,000 Additional Paid-in Capital $5,500

Sept. 1: Cash $84,000 Common stock $36,000 Additional Paid-in Capital $48,000

Nov. 1: Cash $218,000 Preferred stock $200,000 Additional Paid-in Capital $18,000

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