Question

Pronghorn Corporation has been authorized to issue 21.000 shares of $100 par value, 10 preferred stock and 1.040.000 shares of no-nar common stock. The corporation ass $2.60 stated value to the common stock. At December 31, 2020, the ledger contants common stock. The corporation assigned a balances pertaining to stockholders' equity. At December 31, 2020, the ledger contained the following Preferred Stock $125,000 Pald-in Capital in Excess of Par-Preferred Stock 17,000 Common Stock 1,040,000 Paid-in Capital in Excess of Stated Value-Common Stock 1,760,000 Treasury Stock (820 common shares) 9,840 Paid-in Capital from Treasury Stock 1,230 Retained Earnings 82,000 Accumulated Other Comprehensive Income 53,000 The preferred stock was issued for land having a fair value of $142.000. All common stock issued was for cash. In November, 1.230 shares of common stock were purchased for the treasury at a per share cost of $12. In December. 410 shares of treasury stock were sold for $15 per share. No dividends were declared in 2020. Prepare the journal entries for the: (Credit account titles are automatically indented when amount is entered. Do not indent manually.) (1) Issuance of preferred stock for land. (2) Issuance of common stock for cash. (3) Purchase of common treasury stock for cash. (4) Sale of treasury stock for cash. Debit Credit No. Account Titles and Explanation 1. Land referred Stock Paida Canta imonstock

Answer 1

Solution: Journal entries:

Credit Debit $ 142,000 No. Accounts Title 1 Land Preferred stock Paid-in capital in Excess of par -Preferred stock $ $ 125,000 17,000 $ 2,800,000 2 Cash Common Stock Paid-in Capital in Excess of Stated value-Common stock $ 1,040,000 $ 1,760,000 (1,230x$12) $ 14,760 3 Treasury stock Cash $ 14,760 $ 6,150 4 Cash Tresury Stock (410x$12) Paid-in capital from treasury stock [(410x($15-$12) ] $ $ 4,920 1,230

Stockholders' equity section at Dec. 31, 2020:

1,165,000 PROGHORN CORPORATION Balance sheet (partial) Dec. 31, 2020 Stockholders' Equity Paid-in Capital Capital Stock Preferred stock $ 125,000 Common stock 1,040,000 Total Capital stock Additional paid-in Capital Paid-in Capital in Excess of par-common stock $ 1,760,000 Paid-in Capital in Excess of par-preferred stock 17,000 Paid-in Capital from tresury stock 1,230 Total Additioanl paid-in capital Total Paid-in Capital Retained Earnings Total Paid-in Capital and Retained Earnings Accumulated Other Comprehensive Income Less: Treasury stock Total Stockholders' Equity 1,778,230 2,943,230 82,000 3,025,230 53,000 9,840 $ 3,068,390

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