Question

Professional Products Inc., a wholesaler of office products, was organized on February 5 of the current year, with an authorization of 26,000 shares of preferred 2% stock, $100 par and 550,000 shares of $10 par common stock. The following selected transactions were completed during the first year of operations: Feb. 5 5 Issued 247,000 shares of common stock at par for cash. Issued 300 shares of common stock at par to an attorney in payment of legal fees for organizing the corporation. Apr. 9 Issued 69,100 shares of common stock in exchange for land, buildings, and equipment with fair market prices of $153,500, $488,060, and $160,000 respectively. Issued 15,000 shares of preferred stock at $109 for cash. June 14 Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles.

Answer 1

Ans:

Date	Account title	Debit	Credit
Mar 1.	Cash	2,470,000
	Common stock		2,470,000
	(247000x10)
Mar 1.	Organisation expense	3000
	Common stock		3000
	(300 x 10)
May 31.	Land	153500
	Building	488060
	Equipment	160000
	Common stock		691,000
	paid in excess of par - common stock (153500+488060+16000 - 691000)		110560
Jul 1.	Cash	1635000
	Preferred stock		1500000
	paid in excess of par - preferred stock    (15000 * 9)		135000