An inexperienced accountant for Moon Corporation made the following entries July

Question

An inexperienced accountant for Moon Corporation made the following entries July Cash 210,000 Common Stock 210,000 (Issued 15,000 shares of no-par common stock, stated value $10 per share) Sept. 1Common Stock Retained Earnings 28,000 6,000 Cash 34,000 (Purchased 2,000 shares issued on July 1 for the treasury at $17 per share) Dec. Cash 18,000 Common Stock Gain on Sale of Stock 14,000 4,000 (Sold 1,000 shares of the treasury stock at $18 per share) On the basis of the explanation for each entry, prepare the entry that should have been made for the transactions. (Omit explanations.) Solution:

Explanation / Answer

Part 1. Corrected journal entries:

Question a:

Journal entry:

b.Stockholders equity:

Date Account Debit Credit Jul 1 Cash 210000 To Common stock 150000 To Additional paid in capital-C/s 60000 Sep 1 Treasury stock 34000 To cash 34000 Dec 1 Cash 18000 To Treasury stock 17000 To Additional paid in capital-T/s 1000

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