P 18-1 Various stock transactions; correction of journal entries
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 million common shares, $1 par per share.
Required:
Prepare the appropriate journal entries to record each transaction.
Jan. 9 Issued 40 million common shares for $20 per share.
Mar 11 Issued 5,000 shares in exchange for custom-made equipment. McCollum's shares have traded recently on the stock exchange at $20 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).
Jan 12 Land--------------------------------$2,000,000
Paid in capital-Donation of land----------------$2,000,000
Sept 1 Common stock-----------------------$2,000,000
Retained Earnings--------------------$48,000,000
Cash------------------------------------------$50,000,000
Dec 1 Cash--------------------------------$26,000,000
Common stock---------------------------------$1,000,000
Gain on sale of previously issued shares----------$25,000,000
Required:
Prepare the journal entries that should have been recorded for each of the transactions.
Click here for the solution: During its first year of operations, the McCollum Corporation entered into the following transactions relating to shareholders’ equity
