1 answer

On December 29, 2019, Hade Company was authorized to issue 100,000 shares of $5 par value...

Question:

On December 29, 2019, Hade Company was authorized to issue 100,000 shares of $5 par value preferred stock and 600,000 shares of $30 par value common stock. It then completed the following transactions in the month of January 2020: 

Jan. 6Issues 60,000 shares of common stock at $36 per share for cash.   Jan. 19

Issued 2,000 shares of preferred stock for $70,000 cash.

Jan. 26

Exchanged 55,000 share of common stock for the following assets at the indicated fair market values:

Land                   $305,000

Building            $640,000

Machinery       $760,000

Required:

A.  Prepare the journal entries to record the above transactions. 

B.  Prepare the balance sheet of the company as of January 31, 2020.


Answers

A. Prepare the journal entries to record the above transactions.

Debit Credit
6-Jan Cash $ 1,800,000
Common Stock (60000*$5) $     300,000
Additional Paid-in Capital-Common Stock $ 1,500,000
Debit Credit
19-Jan Cash $       70,000
Prffered Stock (2000*$30) $       60,000
Additional Paid-in Capital-preferred stock $       10,000
Debit Credit
26-Jan Land $     305,000
Building $     640,000
Machinery $     760,000
Common Stock (55000*$5) $     275,000
Additional Paid-in Capital-Common Stock

$ 1,430,000

  Prepare the balance sheet of the company as of January 31, 2020.

Partial Balanace Sheet
Current Assets
Cash $     1,870,000
Non Current assets
Land $                                                                   305,000
Building $                                                                   640,000
Machinery $                                                                   760,000 $     1,705,000
Total Assets $    3,575,000
Liabilities
Stock Holders Equity
Common Stock $                                                                   575,000
Prffered Stock 60000
Additional Paid-in Capital-Common Stock $                                                                2,930,000
Additional Paid-in Capital-preferred stock $                                                                     10,000 $    3,575,000
Total Liabilities $     3,575,000
.

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