Stockholders' equity accounts and other related accounts of the JKL Manufacturing Corporation as of October 1, 20-1, the beginning of its fiscal year, follow.

Preferred Stock Subscriptions Receivable		$    80,000
Preferred Stock, 8%, $10 par (200,000 shares authorized, 50,000 shares issued)		500,000
Preferred Stock Subscribed (10,000 shares)		100,000
Paid-In Capital in Excess of Par—Preferred Stock		50,000
Common Stock, $10 par (1,000,000 shares authorized, 200,000 shares issued)		2,000,000
Paid-In Capital in Excess of Par—Common Stock		500,000
Retained Earnings		2,250,000

During the fiscal year ended September 30, 20-2, JKL Manufacturing completed the following transactions affecting stockholders' equity:

(a) Received the balance due on preferred stock subscriptions and issued the necessary certificates.

(b) Purchased 10,000 shares of common treasury stock for $120,000.

(c) Received subscriptions for 8,000 shares of 8% preferred stock at $12 each, collecting one-fourth of the subscription price.

(d) Sold 6,000 shares of common treasury stock for $78,000.

(e) Issued 80,000 shares of common stock at $15, receiving cash.

(f) Sold 2,000 shares of common treasury stock for $22,000.

(g) Issued 100,000 shares of common stock with a market value of $15 per share in exchange for land for business expansion.

 

REQUIRED
Prepare general journal entries for the transactions, identifying each transaction by the appropriate letter.

The general journal is the book where entries are initially made relating to financial transactions entered into by the company. 

(a) The first journal entry is a debit to cash and a credit to preferred stock subscriptions receivable account of $80,000 for the payment received from preferred stock subscriber, and the second journal entry is a debit to preferred stock subscribed and a credit to preferred stock for $100,000 for the issuance of certificates indicating full payment of previously subscribed preferred stock.

(b) The journal entry is a debit to common treasury stock and a credit to cash of $120,000 for the purchase of common stock that has been previously issued, called the common treasury stock. The common treasury stock is valued at the purchase price of $120,000 for 10,000 shares or $12 per share. 

(c) The journal entry is a debit to cash account of $24,000 for the one-fourth of the subscription price received, which is 8,000 shares multiplied to $12 per share, a debit to preferred stock subscriptions receivable account of $72,000 for the three-fourths of the subscription price not yet received, a credit to preferred stock subscribed account of $80,000, which is 8,000 shares subscribed multiplied to the $10 par value per share, and a credit to paid-in capital in excess of par - preferred stock account of $16,000, which is 8,000 shares subscribed multiplied to the $2 premium per share, for the subscription for preferred stock received that has been partially paid.

(d) The journal entry is a debit to cash account of $78,000, a credit to common treasury stock of $72,000, which is 6,000 shares multiplied to the purchase price of $12 per share from the journal entry of transaction (b), and a credit to paid-in capital from sale of treasury stock account of $6,000, which is the difference between the sales price of $78,000 and purchase price of $72,000, for the sale of common treasury stock. A higher sales price of treasury stock versus purchase price increases the paid-in capital from sale of treasury stock account via a credit entry.

(e) The journal entry is a debit to cash account of $1,200,000, which is 80,000 shares multiplied by $15, a credit to common stock account of $800,000, which is 80,000 shares multiplied by $10 par value per share, and a credit to paid-in capital in excess of par - common stock account for $400,000, which is 80,000 shares multiplied to the $5 premium per share, for the issuance of fully paid common stock.

(f) The journal entry is a debit to cash account of $22,000, and a debit to paid-in capital from sale of treasury stock of $2,000, which is the difference between the sales price of $22,000 and purchase price of $24,000, and a credit to common treasury stock of $24,000, which is 2,000 shares multiplied to the purchase price of $12 per share from the journal entry of transaction (b), for the sale of common treasury stock. A lower sales price of treasury stock versus purchase price decreases the paid-in capital from sale of treasury stock account via a debit entry.

(g) The journal entry is a debit to land account of $1,500,000, which is 100,000 shares multiplied by $15, a credit to common stock account of $1,000,000, which is 100,000 shares multiplied by $10 par value per share, and a credit to paid-in capital in excess of par - common stock account for $500,000, which is 100,000 shares multiplied to the $5 premium per share, for the issuance of fully paid common stock. The value of the land, a non-cash asset, exchanged for the common stock is based on the market value of the common stock as this can be clearly determined.