Kingbird Corporation is authorized to issue 47,000 shares of $5 par value common stock. During 2020, Kingbird took part in the following selected transactions.

1. Issued 5,500 shares of stock at $44 per share, less costs related to the issuance of the stock totaling $7,200.

2. Issued 1,200 shares of stock for land appraised at $47,000. The stock was actively traded on a national stock exchange at approximately $45 per share on the date of issuance.

3. Purchased 520 shares of treasury stock at $45 per share. The treasury shares purchased were issued in 2016 at $42 per share.

Required:

(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.

Question

Cotton

Business

24 July, 21:00

Kingbird Corporation is authorized to issue 47,000 shares of $5 par value common stock. During 2020, Kingbird took part in the following selected transactions.

1. Issued 5,500 shares of stock at $44 per share, less costs related to the issuance of the stock totaling $7,200.

2. Issued 1,200 shares of stock for land appraised at $47,000. The stock was actively traded on a national stock exchange at approximately $45 per share on the date of issuance.

3. Purchased 520 shares of treasury stock at $45 per share. The treasury shares purchased were issued in 2016 at $42 per share.

Required:

(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.

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Answers (1)

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Milton Haas · Answer 1

Answer and Explanation:

Journal Entry

a).

Cash A/c (5500 * 44) - 7200 Dr. $234,800

To Common stock A/c (5500*5) $27,500

To Paid-In capital in excess of par-common stock A/c $207,300

($234,800 - $27,500)

(To record common stock issued)

b).

Land A/c (1200*$45) Dr. $54,000

To Common stock A/c (1200*$5) $6,000

To Paid-In capital (in excess of par-common stock) A/c $48,000

($54,000 - $6,000)

(To record land purchased in exchange of common stock)

c).

Treasury stock A/c (520*$45) Dr. $23,400

To Cash A/c $23,400

(To record purchase of treasury stock)