Quay Co. had the following transactions during the current period. Mar.2 Issued 5,000 shares of $7 par value common stock to attorneys in payment of a bill for $39,600 for services performed in helping the company to incorporate.
June 12 Issued 63,400 shares of $7 par value common stock for cash of $519,100.
July 11 Issued 2,175 shares of $110 par value preferred stock for cash at $130 per share.
Nov. 28 Purchased 2,350 shares of treasury stock for $83,500.
Journalize the transactions.

Answer and Explanation:

The journal entries are shown below:

On March 2

Incorporation expense Dr $39,600

     To Common stock (5,000 × $7) $35,000

     To Additional paid in capital $4,960

(being incorporation expense is recordeD)

On June 12

Cash Dr $519,100

     To Common stock (63,400 × $7) $443,800

     To Additional paid in capital $75,300

(being issuance of the common stock is recorded)

On July 11

Cash Dr (2,175 × $130) $282,750

     To Preferred stock (2,175 × $110) $239,250

     To Additional paid in capital $43,500

(being issuance of the preferred stock is recorded)

On Nov 28

Treasury stock Dr $83,500

       To Cash $83,500

(being cash paid is recorded)

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