Eastport Inc. was organized on June 5, Year 1. It was authorized to issue 360,000 shares of $9 par common stock and 40,000 shares of 4 percent cumulative class A preferred stock. The class A stock had a stated value of $20 per share. The following stock transactions pertain to Eastport Inc.: Issued 19,000 shares of common stock for $14 per share. Issued 11,000 shares of the class A preferred stock for $25 per share. Issued 52,000 shares of common stock for $17 per share.

Prepare general journal entries for these transactions.

Answer and Explanation:

The journal entries are shown below:

1) Cash Dr (19,000 shares * 14) $266,000

To Common stock (19,000 shares * 9) $171,000

To Additional paid in capital - common (19,000 shares * 5) $95,000

(Being the issuance of the common stock is recorded)

2 Cash Dr (11,000 shares * $25) $275,000

To Preferred stock (11,000 shares * $20) $220,000

To Additional paid in capital - preferred (11,000 shares * $5) $55,000

(Being the issuance of the preferred stock is recorded)

3) Cash Dr (52,000 shares * 17) $884,000

To Common stock (52,000 shares * 9) $468,000

To Additional paid in capital - common (52,000 shares * 8) $416,000

(Being the issuance of the common stock is recorded)

For recording this journal entries we debited the cash as it increased the assets and credited the common stock and additional paid in capital as it also increased the stockholder equity