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Prepare the journal entries that should have been recorded

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Reference no: EM132486194

Part A

During its first year of operations, the McCollum Corporation entered into the following transactions relating to shareholders' equity. The corporation was authorized to issue 100,000,050 common shares, $1 par per share.

Required:

Question 1: Prepare the appropriate journal entries to record each transaction.

Jan. 9 Issued 50,000,000 common shares for $16 per share.

Mar. 11 Issued 4,400 shares in exchange for custom-made equipment.

McCollum's shares have traded recently on the stock exchange at $16 per share.

Part B

A new staff accountant for the McCollum Corporation recorded the following journal entries during the second year of operations. McCollum retires shares that it reacquires (restores their status to that of authorized but unissued shares).

DateGeneral JournalDebitCredit

Jan. 12

Land4,000,000

Paid-in capital-donation of land 4,000,000

Sept. 1

Common stock4,000,000

Retained earnings164,000,000

Cash 168,000,000

Dec. 1

Cash44,000,000

Common stock 2,000,000

Gain on sale of previously issued shares 42,000,000

Required:

Question 2: Prepare the journal entries that should have been recorded for each of the transactions.

Reference no: EM132486194

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