Issuing Common and Preferred Stock
Klaus Herrmann, a biochemistry professor, organized BioproductsInc. early this year. The firm will manufacture antibiotics usinggene splicing technology. Bioproducts' charter authorizes the firmto issue 10,000 shares of 7%, $70 par preferred stock and 150,000shares of $5 par common stock. During the year, the firm engaged inthe transactions listed below.
1.Issued 50,000 common shares to Klaus Herrmann in exchange for$550,000 cash.
2.Sold 8,000 common shares to a potential customer for $12 pershare.
3.Issued 4,000 shares of preferred stock to a venture capital firmfor $85 per share.
4.Gave 100 shares of common stock to Margaret Robb, a localattorney, in exchange for Margaret's work in arranging for thefirm's incorporation. Margaret usually charges $1,200 forcomparable work.
Required:
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Prepare a journal entry for each of these transactions. For acompound transaction, if an amount box does not require an entry,leave it blank.
a.
(Record sale of common stock)
b.
(Record sale of common stock)
c.
(Record sale of preferred stock)
d.
(Record sale of common stock)