Question

Pina Corporation is authorized to issue 48,000 shares of $5 par value common stock. During 2020, Buffalo took part in the following selected transactions.
1. Issued 4,600 shares of stock at $48 per share, less costs related to the issuance of the stock totaling $8,100.
2. Issued 1,000 shares of stock for land appraised at $48,000. The stock was actively traded on a national stock exchange at approximately $49 per share on the date of issuance.
3. Purchased 490 shares of treasury stock at $45 per share. The treasury shares purchased were issued in 2016 at $42 per share.
A. Prepare the journal entry to record item 1.
B. Prepare the journal entry to record item 2.
C. Prepare the journal entry to record item 3 using the cost method

Answer 1

Answer: Please see below

Explanation:

1.   To record  common stock issued.

Account titles                                         Debit                 Credit

Cash ( 4600 x 48) - $8100               $ 212, 700

Common stock (4,600 x 5)                                             $23,000

Paid in capital in excess ofpar -  common stock

( 212,700 - 23,000)                                                          $210,400

2.To record  land purchased.

Account titles                                         Debit                 Credit

land (1000 x 49)                             $ 49, 000

Common stock (1000 x 5)                                             $ 5,000

Paid in capital in excess of par- common stock

( 49,000- 5,000)                                                              $41,000

3. Journal to record purchase of treasury stock

Account titles                                         Debit                 Credit

Treasury stock ( $490 x45)                      $22,050

Cash                                                                                   $ 22,050