Beauty Island Corporation began operations on April 1 by issuing 60,000 shares of $5 par value common stock for cash at $13 per share. On April 19, it issued 2,000 shares of common stock to attorneys in settlement of their bill of $27,500 for organization costs. In addition, Beauty Island issued 1,000 shares of $1 par value preferred stock for $6 cash per share. Journalize the issuance of the common and preferred shares, assuming the shares are not publicly traded

Date               Account Title                                             Debit              Credit

April 1             Cash                                                        $780,000

                      Common stock                                                             $300,000

                      Paid in Capital in excess of par -                                 $480,000

                      Common stock

Working

Cash = 60,000 shares * 13 = $780,000

Common stock = 60,000 * 5 = $300,000

Date               Account Title                                             Debit              Credit

April 1             Organization costs - Attorney fees       $27,500

                      Common Stock                                                              $10,000

                       Paid in Capital in excess of par -                                 $17,500

                      Common stock

Working

Common stock = 2,000 * 5 par value = $10,000

Date               Account Title                                             Debit              Credit

April 1             Cash                                                         $6,000

                      Preferred stock                                                                 $1,000

                      Paid in Capital in excess of par -                                     $5,000

                      Common stock

Working

Cash =  1,000 * $6 = $6,000

Preferred stock = 1,000 * $1 = $1,000

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