Practice Problem 1
Bednar, Inc. is authorized to issue 200,000 shares of $10 par value common stock and 10,000 shares of $50 par value, 8% preferred stock. Bednar completed the following stock issuance transactions during 2016:
- June 1, 2016, Bednar issued 50,000 shares of $10 par value common stock for $60 per share.
- July 3, 2016, Bednar issued 2,000 shares of $50 par value, 8% preferred stock for $55 per share.
- August 20, 2016, Bednar issued 5,000 shares of $10 par value common stock in exchange for equipment with a market value of $75,000.
Journalize the transactions (explanations are not required).
Solution
General Journal
| Date | Accounts and explanation | Debit | Credit |
|---|
| June 1 | Cash | $3,000,000 |
-
|
|
-
|
Common stock
|
-
| $500,000 |
|
-
|
Paid-in capital in excess of par value
|
-
|
$2,500,000
|
|
-
|
-
|
-
|
-
|
| July 3 | Cash | $110,000 |
-
|
|
-
|
Preferred stock
|
-
| $100,000 |
|
-
|
Paid-in capital in excess of par value
|
-
| $10,000 |
|
-
|
-
|
-
|
-
|
| August 20 | Equipment | $75,000 |
-
|
|
-
|
Common stock
|
-
| $50,000 |
|
-
|
Paid-in capital in excess of par value
|
-
| $25,000 |
