Part A During its first year of operations, the McCollum Corporation entered int
ID: 2551941 • 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 $100,000,080 common shares, $1 par per share Requirec Prepare the appropriate journal entries to record each transaction. Jan. 9 Issued $60,000,000 common shares for $22 per share. Mar. 11 Issued 4,700 shares in exchange for custom-made equipment. McCollum s shares have traded recently on the stock exchange at $22 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) Debit 2,000,000 Date General Journal Credit Jan. 12 Land Paid-in capital-donation of land 2,000,000 2,000,000 52,000,000 Sept. 1 Common stock Retained earnings Cash 54,000,000 Dec. 1 Cash 28,000,000 Common stock 1,000,000 Gain on sale of previously issued shares 27,000,000 Required Prepare the journal entries that should have been recorded for each of the transactions.Explanation / Answer
Date Accounts title and Explanation Debit Credit 9-Jan Cash (60,000,000*22) $ 1,320,000,000 Common stock $ 60,000,000 paid in excess of par $ 1,260,000,000 ( To record the issue of common stock 11-Mar Equipment (4700*22) $ 103,400 Common stock $ 4,700 paid in capital in excess of par $ 98,700 ( To record the issue of common stock against purchase of the equipment) 2) 12-Jan Land $ 2,000,000 Revenue donation $ 2,000,000 ( to record the manufacturing overhead cost applied during the year) 1-Sep Common stock $ 2,000,000 paid in capital (2*21) $ 42,000,000 retained earnings $ 10,000,000 Cash $ 54,000,000 ( To record shares purchased 1-Dec Cash $ 28,000,000 common stock $ 1,000,000 paid in capital-excess of par $ 27,000,000 ( To record the issue of the common stock