Question

E15.1B (L0 1) (Recording the Issuances of Common Stock) During its first year of operations, Endevor Corporation had the following transactions pertaining to its common stock. Apr. 26 Issued 15,000 shares for cash at $4.50 per share. May 11 Issued 10,000 shares to attorneys in payment of a bill for $48,000 for services rendered in helping the company to incorporate. Aug. 1 Issued 20,000 shares for cash at $5 per share. Nov. 1 Issued 10,000 shares for cash at $7 per share. Instructions (a) Prepare the journal entries for these transactions, assuming that the common stock has a par value of $1 per share. (b) Prepare the journal entries for these transactions, assuming that the common stock is no par with a stated value of $3 per share.

Answer 1

Answer:

Endevor Corporation

Journal Entries:

a) Assuming that the common stock has a par value of $1 per share

Apr. 26 Debit Cash $67,500

Credit Common stock $15,000

Credit APIC $52,500

To record the issue of 15,000 shares for cash at $4.50 per share.

May 11 Debit Attorneys' fees $48,000

Credit Common stock $10,000

Credit APIC $38,000

To record the issuance of 10,000 shares to attorneys in payment of a bill for $48,000 for services rendered in helping the company to incorporate.

Aug. 1 Debit Cash $100,000

Credit Common stock $20,000

Credit APIC $80,000

To record the  issuance of 20,000 shares for cash at $5 per share.

Nov. 1 Debit Cash $70,000

Credit Common stock $10,000

Credit APIC $60,000

To record the issuance of issuance of 10,000 shares for cash at $7 per share.

b) Assuming the common stock is no par with a stated value of $3 per share:

Apr. 26 Debit Cash $67,500

Credit Common stock $45,000

Credit  APIC $22,500

To record the issue of 15,000 shares for cash at $4.50 per share.

May 11 Debit Attorneys' fees $48,000

Credit Common stock $30,00

Credit APIC $18,000

To record the issuance of 10,000 shares to attorneys in payment of a bill for $48,000 for services rendered in helping the company to incorporate.

Aug. 1 Debit Cash $100,000

Credit Common stock $60,000

Credit APIC $20,000

To record the issuance of 20,000 shares for cash at $5 per share.

Nov. 1 Debit Cash $70,000

Credit Common stock $30,000

Credit APIC $40,000

To record the issuance of 10,000 shares for cash at $7 per share.

Explanation:

a) Data and Analysis:

a) Assuming that the common stock has a par value of $1 per share

Apr. 26 Cash $67,500 Common stock $15,000 APIC $52,500 for the issue of 15,000 shares for cash at $4.50 per share.

May 11 Attorneys' fees $48,000 Common stock $10,000 APIC $38,000 issuance of 10,000 shares to attorneys in payment of a bill for $48,000 for services rendered in helping the company to incorporate.

Aug. 1 Cash $100,000 Common stock $20,000 APIC $80,000 issuance of 20,000 shares for cash at $5 per share.

Nov. 1 Cash $70,000 Common stock $10,000 APIC $60,000 issuance of 10,000 shares for cash at $7 per share.

b) Assuming the common stock is no par with a stated value of $3 per share:

Apr. 26 Cash $67,500 Common stock $45,000 APIC $22,500 for the issue of 15,000 shares for cash at $4.50 per share.

May 11 Attorneys' fees $48,000 Common stock $30,000 APIC $18,000 issuance of 10,000 shares to attorneys in payment of a bill for $48,000 for services rendered in helping the company to incorporate.

Aug. 1 Cash $100,000 Common stock $60,000 APIC $20,000 issuance of 20,000 shares for cash at $5 per share.

Nov. 1 Cash $70,000 Common stock $30,000 APIC $40,000 issuance of 10,000 shares for cash at $7 per share.