Question

Landhill Corporation is authorized to issue 49,000 shares of $5 par value common stock. During 2020, Sandhill took part in the following selected transactions.

1. Issued 4,500 shares of stock at $45 per share, less costs related to the issuance of the stock totaling $7,900.
2. Issued 1,100 shares of stock for land appraised at $49,000. The stock was actively traded on a national stock exchange at approximately $46 per share on the date of issuance.
3. Purchased 470 shares of treasury stock at $41 per share. The treasury shares purchased were issued in 2016 at $38 per share.

Required:
a. Prepare the journal entry to record item 1.
b. Prepare the journal entry to record item 2.
c. Prepare the journal entry to record item 3 using the cost metho

Answer 1

Answer: Please see answer in explanation column

Step-by-step explanation:

1. Journal to record common stock issued

Account title Debit Credit

Cash $210,400

Common stock $22,500

Paid in capital in excess of par $187,900

common stock

Calculation:

Cash = 4,500 x $45 + $7900= $210,400

Common stock =4,500 x $5=$22,500

Paid in capital in excess of par common stock = Cash - Common stock =$210,400-$22,500=$187,900

2) To reccord Land purchased in exchange of common stock

Account title Debit Credit

Land $50,600

Common stock $ 5,500

Paid in capital in excess of par $45,100

common stock

Calculation:

Land= 1,100 x $46 = $50,600

Common stock =1,100 x $5=$5,500

Paid in capital in excess of par common stock = 1100 x (46-5)$41=45,100

3) To record purchase of treasury stock

Account title Debit Credit

Treasury stock $19,270

Cash $19,270

Calculation:

Treasury stock = 470 shares x$41= $19,270