Assume that no other common share transactions had been recorded earlier. Based
ID: 2341165 • Letter: A
Question
Assume that no other common share transactions had been recorded earlier. Based on the explanation for each entry, prepare the entries that should have been made for the common share transactions. If an entry is correct, repeat the entry. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Exercise 15-4
Novak Inc. recently hired a new accountant with extensive experience in accounting for partnerships. Because of the pressure of the new job, the accountant was unable to review what he had learned earlier about corporation accounting. During the first month, he made the following entries for the corporation’s common shares:Date Account Titles and Explanation Debit Credit May 12 Cash 235,200 Common Shares 235,200 (Issued 14,700 common shares at $16 per share.) 10 Cash 350,400 Common Shares 350,400 (Issued 7,300 preferred shares at $48 per share.) 15 Common Shares 16,770 Cash 16,770 (Purchased and retired 1,290 common shares at $13 per share.) 31 Cash 8,160 Common Shares 6,860 Gain on Sale of Shares 1,300 (Issued 480 shares at $17 per share.)
Assume that no other common share transactions had been recorded earlier. Based on the explanation for each entry, prepare the entries that should have been made for the common share transactions. If an entry is correct, repeat the entry. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Explanation / Answer
Solution:
Date
General Journal
Debit
Credit
May.12
Cash
$235,200
Common Stock
$235,200
(Issued 14,700 common shares at $16 per share.)
May.10
Cash
$350,400
Preferred Stock
$350,400
(Issued 7,300 preferred shares at $48 per share.)
May.15
Treasury Stock
$16,770
Cash
$16,770
(Purchased and retired 1,290 common shares at $13 per share.)
May.31
Cash (480 Shares x $17)
$8,160
Treasury Stock (480 Shares at Cost $13)
$6,240
Pain in Capital from Treasury Stock (Bal fig)
$1,920
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Date
General Journal
Debit
Credit
May.12
Cash
$235,200
Common Stock
$235,200
(Issued 14,700 common shares at $16 per share.)
May.10
Cash
$350,400
Preferred Stock
$350,400
(Issued 7,300 preferred shares at $48 per share.)
May.15
Treasury Stock
$16,770
Cash
$16,770
(Purchased and retired 1,290 common shares at $13 per share.)
May.31
Cash (480 Shares x $17)
$8,160
Treasury Stock (480 Shares at Cost $13)
$6,240
Pain in Capital from Treasury Stock (Bal fig)
$1,920