Question

Verdero Company is authorized to issue 100,000 shares of $2 par value common stock. Verdero has the following transactions

• a)Issued 20,000 shares at $30 per share ; received cash.
• (b) Issued 250 shares to attorneys for services in securing the corporate charter and for preliminary legal costs of organizing the corporation. The value of the services was $9,000.
• (c) Issued 300 shares , valued objectively at $10,000 , to the employees instead of paying them cash wages.
• (d) Issued 12,500 shares of stock in exchange for a building valued at $295,000 and land valued at $80,000 . (The building was originally acquired by the investor for $250,000 and has $100,000 of accumulated depreciation; the land was originally acquired for $30,000.)
• (e) Received cash for 6,500 shares of stock sold at $38 per share .
• (f) Issued 4,000 shares at $45 per share; received cash.

Make the journal entries necessary for Verdero Company to record each transaction.

Answer 1

Transaction	Account Titles and Explanations	Debit	Credit
a)	Cash (20,000*$30)	$   600,000
	Common stock (20,000*$2)		$     40,000
	Paid in capital in excess of par - Common stock		$   560,000
b)	Organization expense	$       9,000
	Common stock (250*$2)		$           500
	Paid in capital in excess of par - Common stock		$       8,500
c)	Wages expense	$     10,000
	Common stock (300*$2)		$           600
	Paid in capital in excess of par - Common stock		$       9,400
d)	Building	$   295,000
	Land	$     80,000
	Common stock (12,500*$2)		$     25,000
	Paid in capital in excess of par - Common stock		$   350,000
e)	Cash (6,500*$38)	$   247,000
	Common stock (6,500*$2)		$     13,000
	Paid in capital in excess of par - Common stock		$   234,000
f)	Cash (4,000*$45)	$   180,000
	Common stock (4,000*$2)		$       8,000
	Paid in capital in excess of par - Common stock		$   172,000

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