Question

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1. pha Sounds Corp., an electric guitar retailer, was organized by Michele Kirby, Paul Glenn, and Gretchen Northway. The charter authorized 600,000 shares of The stock outstanding when a corporation has issued only one class of stock.common stock with a The monetary amount printed on a stock certificate.par of $40. The following transactions affecting The owners' equity in a corporation.stockholders' equity were completed during the first year of operations.

   Journalize the entries to record the transactions.

   a. Issued 13,000 shares of stock at par to Paul Glenn for cash.

   	Cash Common Stock Paid-In Capital in Excess of Par-Common Paid-In Capital in Excess of Par-Preferred Preferred Stock
   	Cash Common Stock Paid-In Capital in Excess of Par-Common Paid-In Capital in Excess of Par-Preferred Preferred Stock

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   b. (1) Issued 400 shares of stock at par to Michele Kirby for promotional services provided in connection with the organization of the corporation, and (2) issued 19,000 shares of stock at par to Michele Kirby for cash.

   (1)	Common Stock Organizational Expenses Paid-In Capital in Excess of Par-Common Preferred Stock Retained Earnings
   	Cash Common Stock Organizational Expenses Paid-In Capital in Excess of Par-Common Preferred Stock
   (2)	Cash Common Stock Paid-In Capital in Excess of Par-Common Preferred Stock Retained Earnings
   	Cash Common Stock Organizational Expense Paid-In Capital in Excess of Par-Common Preferred Stock

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   c. Purchased land and a building from Gretchen Northway in exchange for stock issued at par. The building is mortgaged for $492,000 for 20 years at 7% and there is accrued interest of $5,500 on the mortgage note at the time of the purchase. It is agreed that the land is to be priced at $268,000 and the building at $735,000, and that Northway’s equity will be exchanged for stock at par. The corporation agreed to assume responsibility for paying the mortgage note and the accrued interest.

   For a compound transaction, if an amount box does not require an entry, leave it blank.

   	Cash Common Stock Interest Payable Land Mortgage Note Payable
   	Building Common Stock Interest Payable Mortgage Note Payable Paid-In Capital in Excess of Par
   	Cash Interest Expense Interest Payable Land Retained Earnings
   	Building Cash Mortgage Note Payable Paid-In Capital in Excess of Par Preferred Stock
   	Common Stock Land Paid-In Capital in Excess of Par Preferred Stock Retained Earnings

Answer 1

B2 no. А В C D E F 1 debit credit account titles 2 no. Cash $520,000 a $520,000 Common Stock 5 6 ь (1) Organizational Expenses $16,000 7 $16,000 Common Stock 9 ь (2) Cash $760,000 10 $760,000 Common Stock 11 12 Land $268,000 13 C Building $735,000 14 $ 492,000 Mortgage Note Payable 15 Interest Payable $5,500 16 $505,500 Common Stock 17 18 19 st LO oC

for formulas and calculations, refer to the image below -

B2 no. A В C F 1 debit credit account titles 2 no. 3 Cash =13000 40 a Common Stock -D4 5 6 b (1) Organizational Expenses 400 40 7 Common Stock =D7 8 9 b (2) Cash - 19000 40 10 Common Stock 11 D10 12 Land 268000 13 C Building 735000 14 Mortgage Note Payable 492000 15 Interest Payable 5500 16 Common Stock D13 +D14-E15-E16 17 18 19 st LO oC

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