The following expenditures relating to plant assets were made by Spaulding Company during the first 2 months of 2011

ACC 291 Week 2 Assignment

E9‑1 The following expenditures relating to plant assets were made by Spaulding Company during the first 2 months of 2011.

1. Paid $5,000 of accrued taxes at time plant site was acquired.
2. Paid $200 insurance to cover possible accident loss on new factory machinery while the machinery was in transit.
3. Paid $850 sales taxes on new delivery truck.
4. Paid $17,500 for parking lots and driveways on new plant site.
5. Paid $250 to have company name and advertising slogan painted on new delivery truck.
6. Paid $8,000 for installation of new factory machinery.
7. Paid $900 for one-year accident insurance policy on new delivery truck.
8. Paid $75 motor vehicle license fee on the new truck.

Instructions
(a) Explain the application of the cost principle in determining the acquisition cost of plant assets.
(b) List the numbers of the foregoing transactions, and opposite each indicate the account title to which each expenditure should be debited.


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During its first year of operations, Eastern Data Links Corporation entered into the following transactions relating to shareholders' equity

E 18-5 Issuance of shares; noncash consideration

During its first year of operations, Eastern Data Links Corporation entered into the following transactions relating to shareholders' equity. The articles of incorporation authorized the issue of 8 million common shares, $1 par per share, and 1 million preferred shares, $50 par per share.

Required:
Prepare the appropriate journal entries to record each transaction.
Feb. 12 Sold 2 million common shares, for $9 per share.
13 Issued 40,000 common shares to attorneys in exchange for legal services.
13 Sold 80,000 of its common shares and 4,000 preferred shares for a total of $945,000.
Nov. 15 Issued 380,000 of its common shares in exchange for equipment for which the cash price was known to be $3,688,000


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During its first year of operations, the McCollum Corporation entered into the following transactions relating to shareholders’ equity

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