Answer:
Larkspur Corporation
Journal Entries:
Jan. 10:
Debit Cash Account $566,930
Credit Common Stock $80,990
Credit APIC - Common Stock $485,940
To record the issue of 80,990 common stock shares for cash at $7 per share.
Mar. 1:
Debit Cash Account $580,800
Credit Preferred Stock $528,000
Credit APIC - Preferred Stock $52,800
To record the issue of 5,280 preferred stock shares for cash at $110 per share.
Apr. 1:
Debit Land $80,990
Credit Common Stock $24,410
Credit APIC - Common Stock $56,580
To record the issue of 24,410 common stock shares for land.
May 1:
Debit Cash Account $728,910
Credit Common Stock $80,990
Credit APIC - Common Stock $647,920
To record the issue of 80,990 common stock shares for cash at $9 per share.
Aug. 1:
Debit Attorney Fees $53,200
Credit Common Stock $10,900
Credit APIC - Common Stock $42,300
To record the issue of 10,900 common stock shares for attorney services rendered in helping the company organize.
Sept. 1:
Debit Cash Account $119,900
Credit Common Stock $10,900
Credit APIC - Common Stock $109,000
To record the issue of 10,900 common stock shares for cash at $11 per share.
Nov. 1:
Debit Cash Account $124,260
Credit Preferred Stock $109,000
Credit APIC - Preferred Stock $15,260
To record the issue of 1,090 shares of preferred stock for cash at $114 per share.
Step-by-step explanation:
a) Data and Calculations:
Authorized share capital:
10,900 shares of 8%, $100 par value preferred stock
507,800 shares of no-par common stock with a stated value of $1 per share
b) In this case, some shares were issued above the their par values. This gives rise to the creation of a capital account called Additional Paid-in Capital (APIC). This account records the difference between the par value of shares and the issue prices.