Question

Exercise 11-8

Metlock, Inc. had the following transactions during the current period.

Mar.	2		Issued 4,200 shares of $7 par value common stock to attorneys in payment of a bill for $33,800 for services performed in helping the company to incorporate.
June	12		Issued 59,200 shares of $7 par value common stock for cash of $492,100.
July	11		Issued 2,125 shares of $100 par value preferred stock for cash at $130 per share.
Nov.	28		Purchased 1,930 shares of treasury stock for $79,000.

Journalize the transactions. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

On March 2:

4200 shares of $7 par value were issued. The difference between the par value and the incorporation expenses will go to the additional paid in capital. Following journal entry will be made:

Debit Incorporation / Preliminary expenses $33800

Credit Common stock (4200 * $7) $29400

Credit Additional paid in capital $4400

On June 12:

59200 shares of $7 par value were issued. The difference between the par value and the issue price will go to the additional paid in capital. Following journal entry will be made:

Debit Cash    $492100

Credit Common stock (59200 * $7) $414400

Credit Additional paid in capital - Common stock   $77700

Journal entry on July 11:

2125 preferred shares of $100 par value were issued at $130 per share. The difference between the issued amount and the issue proceeds will go to the additional paid in capital. Following journal entry will be made:

Debit Cash (2125 * $130)    $276250

Credit Preferred stock (2125 * $100) $212500

Credit Additional paid in capital - Preferred stock $63750

Journal entry on November 28:

1930 shares of $7 par value were repurchased by the company. The difference between the par value of the shares acquired and the price paid to acquire the treasury shares will be charged from additional paid in capital - common stock. Following journal entry will be made:

Debit Treasury stock (1930 * $7) $13510

Debit Additional paid in capital - Common stock $65490

Credit Cash     $79000