Question

Beauty Island Corporation began operations on April 1 by issuing 60,000 shares of $5 par value common stock for cash at $13 per share. On April 19, it issued 2,000 shares of common stock to attorneys in settlement of their bill of $27,500 for organization costs. In addition, Beauty Island issued 1,000 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 Title Debit Credit

April 1 Cash $780,000

Common stock $300,000

Paid in Capital in excess of par - $480,000

Common stock

Working

Cash = 60,000 shares * 13 = $780,000

Common stock = 60,000 * 5 = $300,000

__________________________________________________________

Date Account Title Debit Credit

April 1 Organization costs - Attorney fees $27,500

Common Stock $10,000

Paid in Capital in excess of par - $17,500

Common stock

Working

Common stock = 2,000 * 5 par value = $10,000

__________________________________________________________

Date Account Title Debit Credit

April 1 Cash $6,000

Preferred stock $1,000

Paid in Capital in excess of par - $5,000

Common stock

Working

Cash = 1,000 * $6 = $6,000

Preferred stock = 1,000 * $1 = $1,000