Question

Calculator Print Item eBook Alpha Sounds Corp., an electric guitar retailer, was organized by Michele Kirby, Paul Glenn, and Gretchen Northway. The charter authorized 500,000 shares of common stock with a par of $1. The following transactions affecting stockholders' equity were completed during the first year of operations. Journalize the entries to record the transactions. If an amount box does not require an entry, leave it blank. a. Issued 13,500 shares of stock at par to Paul Glenn for cash. b. (1) Issued 900 shares of stock at par to Michele Kirby for promotional services provided in connection with the organization of the corporation, and (2) issued 18,000 shares of stock at par to Michele Kirby for cash. c. Purchased land and a building from Gretchen Northway in exchange for stock issued at par. The building is mortgaged for $385,000 for 20 years at 7% and there is accrued interest of $8,500 on the mortgage note at the time of the purchase. The corporation agreed to assume responsibility for paying the mortgage note and accrued interest. It is agreed that the land is to be valued at $144,000 and the building at $575,000, and that Gretchen Northway will be issued stock at par.

Answer 1

Debit($) Credit($) 13500 13500 900 Answer: Transaction Account Titles and Explanation a Cash Common Stock [To record the shares issued for cash at par) b-(1) Organizational Expenses Common Stock (900 x $1) [To record issuance of 900 shares of $1 par value per share to recognize Organization Expense) b-(2) Cash Common Stock (18,000 $1) [To record the shares issued for cash at par] Land Building Interest Payable Mortgage Note payable Common Stock (325,500 x $1) [To record issuance of 325,500 shares of $1 par value per share in exchange of land and Building] 18000 18000 144000 575000 8500 385000 3255001