Part A During its first year of operations, the McCollum Corporation entered int
ID: 2436297 • Letter: P
Question
Part A During its first year of operations, the McCollum Corporation entered into the following transactions relating to shareholders’ equity. The corporation was authorized to issue $100,000,050 common shares, $1 par per share. Required: Prepare the appropriate journal entries to record each transaction. Jan. 9 Issued $50,000,000 common shares for $16 per share. Mar. 11 Issued 4,400 shares in exchange for custom-made equipment. McCollum’s shares have traded recently on the stock exchange at $16 per share. Part B A new staff accountant for the McCollum Corporation recorded the following journal entries during the second year of operations. McCollum retires shares that it reacquires (restores their status to that of authorized but unissued shares).
Required:
Prepare the journal entries that should have been recorded for each of the transactions.
Record the issue of 50,000,000 million common shares for $16 per share.
Note: Enter debits before credits.
Record the issue of 4,400 shares in exchange for custom-made equipment. McCollum’s shares have traded recently on the stock exchange at $16 per share.
Note: Enter debits before credits.
Date General Journal Debit Credit Jan. 12 Land 4,000,000 Paid-in capital—donation of land 4,000,000 Sept. 1 Common stock 4,000,000 Retained earnings 164,000,000 Cash 168,000,000 Dec. 1 Cash 44,000,000 Common stock 2,000,000 Gain on sale of previously issued shares 42,000,000Required:
Prepare the journal entries that should have been recorded for each of the transactions.
Record the issue of 50,000,000 million common shares for $16 per share.
Note: Enter debits before credits.
Date General Journal Debit Credit Jan. 9Record the issue of 4,400 shares in exchange for custom-made equipment. McCollum’s shares have traded recently on the stock exchange at $16 per share.
Note: Enter debits before credits.
Date General Journal Debit Credit Mar. 11Explanation / Answer
Date General journal Dr Cr jan 9 Cash [50000000 shares * ($16)] 800000000 To Common stock[50000000 shares * $1] 50000000 To paid in capital- excess of par[50000000 shares * ($16-$1)] 75000000 mar 11 Equipment (4400 shares*$16) 70400 To Common stock [4400* $1] 4400 To paid in capital- excess of par[4400* $15] 66000