Chapter 20, Problem 1CP

Prepare general journal entries for the following transactions, identifying each transaction by letter:

1. (a) Gnu Company issued 5,000 shares of $1 par common stock to the Prendergas law firm as partial payment of fees incurred to incorporate the business. Gnu was short of cash, so Prendergas agreed to accept $10,000 cash and the shares of common stock in full settlement of its bill for $55,000.
2. (b) Gnu issued 50,000 shares of $1 par common stock in exchange for a parcel of land for building a shopping plaza. (The list price for the land was $400,000; a similar parcel in the same area sold last week for $380,000. During the past month, the price at which Gnu’s common stock has traded on the open market has ranged from $5 to $12 per share. Two trades occurred yesterday at $7 and $10 per share.)
3. (c) Gnu purchased 10,000 shares of $1 par value common treasury stock for $70,000. (This is the only treasury stock that Gnu holds.)
4. (d) Gnu sold 4,000 shares of common treasury stock for $32,000.
5. (e) Gnu sold 5,000 shares of common treasury stock for $30,000.