Brazil Corporation was organized on January 1, 1999. It is authorized to issue 2
ID: 2497990 • Letter: B
Question
Brazil Corporation was organized on January 1, 1999. It is authorized to issue 20,000 shares of 6%, $50 par value preferred stock, and 500,000 shares of common stock with a par value of $1 per share. The following stock transactions were completed during the first year:
Jan. 10 Issued 100,000 shares of common stock for cash at $3 a share.
Mar. 1 Issued 10,000 shares of preferred stock for cash at $51 per share.
Apr. 1 Issued 25,000 shares of common stock for land. The asking price of the land was $90,000; the company's estimate of fair market value of the land was $85,000.
May 1 Issued 75,000 shares of common stock for cash at $4 per share.
Aug. 1 Issued 10,000 shares of common stock to attorneys in payment of their bill for $50,000 pertaining to services rendered in helping the company organize.
Sept. 1 Issued 5,000 shares of common stock for cash at $6 per share.
Nov. 1 Issued 2,000 shares of preferred stock for cash at $53 per share.
Instructions:
Journalize the transactions
Explanation / Answer
Solution:
Date Journal Debit Credit Jan-10 Cash 300,000 Common Stock - 100,000 Additional Paid in Capital - 200,000 Mar-01 Cash 510,000 Preferred stock 500,000 Additional Paid in Capital - 10,000 Apr-01 Land 85,000 Common Stock - 25,000 Additional Paid in Capital - 60,000 May-01 Cash 300,000 Common Stock - 75,000 Additional Paid in Capital - 225,000 Aug-01 Organization Expense 50,000 Common Stock - 10,000 Additional Paid in Capital - 40,000 Sep-01 Cash 30,000 Common Stock - 5,000 Additional Paid in Capital - 25,000 Nov-01 Cash 106,000 Preferred stock 100,000 Additional Paid in Capital - 15,000