Indigo Corporation recently hired a new accountant with extensive experience in accounting for partnerships. Because of the pressure of the new job, the accountant was unable to review what he had learned earlier about corporation accounting. During the first month, he made the following entries for the corporation’s capital stock. May 2 Cash 112,500 Capital Stock 112,500 (Issued 7,500 shares of $12 par value common stock at $15 per share) 10 Cash 765,000 Capital Stock 765,000 (Issued 15,000 shares of $16 par value preferred stock at $51 per share) 15 Capital Stock 7,900 Cash 7,900 (Purchased 790 shares of common stock for the treasury at $10 per share) On the basis of the explanation for each entry, prepare the entries that should have been made for the capital stock transactions.
Indigo Corporation recently hired a new accountant with extensive experience in accounting for partnerships. Because of the pressure of the new job, the accountant was unable to review what he had learned earlier about corporation accounting. During the first month, he made the following entries for the corporation’s capital stock. May 2 Cash 112,500 Capital Stock 112,500 (Issued 7,500 shares of $12 par value common stock at $15 per share) 10 Cash 765,000 Capital Stock 765,000 (Issued 15,000 shares of $16 par value preferred stock at $51 per share) 15 Capital Stock 7,900 Cash 7,900 (Purchased 790 shares of common stock for the treasury at $10 per share) On the basis of the explanation for each entry, prepare the entries that should have been made for the capital stock transactions.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Indigo Corporation recently hired a new accountant with extensive experience in accounting for partnerships. Because of the pressure of the new job, the accountant was unable to review what he had learned earlier about corporation accounting. During the first month, he made the following entries for the corporation’s capital stock.
| May 2 | Cash | 112,500 | ||||
| Capital Stock | 112,500 | |||||
| (Issued 7,500 shares of $12 par value common stock at $15 per share) | ||||||
| 10 | Cash | 765,000 | ||||
| Capital Stock | 765,000 | |||||
| (Issued 15,000 shares of $16 par value |
||||||
| 15 | Capital Stock | 7,900 | ||||
| Cash | 7,900 | |||||
| (Purchased 790 shares of common stock for the treasury at $10 per share) |
On the basis of the explanation for each entry, prepare the entries that should have been made for the capital stock transactions.
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