Question

Quay Co. had the following transactions during the current period.

Mar. 2 Issued 5,000 shares of $5 par value common stock to attorneys in payment of a bill for $30,000 for services performed in helping the company to incorporate.
June 12 Issued 60,000 shares of $5 par value common stock for cash of $375,000.
July 11 Issued 1,000 shares of $100 par value preferred stock for cash at $110 per share.
Nov. 28 Purchased 2,000 shares of treasury stock for $80,000.
Journalize the transactions. (Record journal entries in the order presented in the problem.

Answer 1

Answer and Explanation:

The Journal entry is shown below:-

1. Organization expense Dr, $30,000

To Common stock $25,000

(5,000 × $5)

To Addition paid in capital-common stock $5,000

(Being issue of common stock for payment of organization fees is recorded)

2. Cash Dr, $375,000

To Common stock $300,000

(60,000 × $5)

To Addition paid in capital-common stock $75,000

(Being issue of common stock is recorded)

3. Cash Dr, $110,000

($1,000 × $110)

To Preferred stock $100,000

($1,000 × $100)

To Addition paid in capital-Preferred stock $10,000

(Being issue of preferred stock is recorded)

4. Treasury stock Dr, $80,000

To Cash $80,000

(Being repurchase of own stock is recorded)