Lodi Company is authorized to issue 100,000 shares of no-par, $6 stated-value common stock and 10,000 shares of 9%, $100 par preferred stock. It enters into the following transactions on December 31:1.Accepts a subscription contract to 7,000 shares of common stock at $42 per share and receives a 30% down payment.2.Collects the remaining balance of the subscription contract and issues the common stock.3.Acquires a building by paying $4,000 cash and issuing 3,000 shares of common stock and 900 shares of preferred stock. Common stock is currently selling at $46 per share; preferred stock has no current market value. The building is appraised at $2,270,000.4.Sells 1,000 shares of common stock at $48 per share.5.Sells 900 shares of preferred stock at $110 per share.6.Declares a three-for-one stock split on the common stock, reducing the stated value to $2.00 per share. Required: Prepare the journal entries to record the preceding transactions.

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Lodi Company is authorized to issue 100,000 shares of no-par, $6 stated-value common stock and 10,000 shares of 9%, $100 par preferred stock. It enters into the following transactions on December 31:

1.	Accepts a subscription contract to 7,000 shares of common stock at $42 per share and receives a 30% down payment.
2.	Collects the remaining balance of the subscription contract and issues the common stock.
3.	Acquires a building by paying $4,000 cash and issuing 3,000 shares of common stock and 900 shares of preferred stock. Common stock is currently selling at $46 per share; preferred stock has no current market value. The building is appraised at $2,270,000.
4.	Sells 1,000 shares of common stock at $48 per share.
5.	Sells 900 shares of preferred stock at $110 per share.
6.	Declares a three-for-one stock split on the common stock, reducing the stated value to $2.00 per share.

Required:

Prepare the journal entries to record the preceding transactions.

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