Question

Splish Brothers Inc. began operations on April 1 by issuing 52,300 shares of $5 par value common stock for cash at $15 per share. On April 19, it issued 1,800 shares of common stock to attorneys in settlement of their bill of $28,900 for organization costs. In addition, Splish Brothers issued 1,100 shares of $1 par value preferred stock for $6 cash per share. Journalize the issuance of the common and preferred shares, assuming the shares are not publicly traded.

Answer 1

Date Account titles and Explanation Debit Credit

Apr 1 Cash $679,900

Common stock $261,500

(52,300*5)

Paid in common stock in excess of par $418,400

(52,300*$13-$5)

(To record common stock issued)

Apr 19 Organisation expenses $28,900

Common stock $9,000

(1800*5)

Paid in common stock in excess of par $19,900

(To record issuance of comm1,100on stock for attorney.s fees)

Apr 19 Cash (1,100*$6) $6,600

Preferred stock (1,100*$1) $1,100

Paid in preferred capital in excess of par $5,500

(To record common preferred stock for cash)