Carolyn Corporation recently hired a new accountant with extensive experience in accounting for partnerships. Because of the pressure of the new job, the accountant was unable to review his textbooks on the topic of corporation accounting. During the first month, the accountant made the following entries for the corporation?s capital stock.

InstructionsOn the basis of the explanation for each entry, prepare the entry that should have been made for the capital stocktransactions.

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Cash May 2 130,000 Capital Stock (Issued 10,000 shares of $10 par value common stock at $13 per share) 130,000 10 Cash 600,000 Capital Stock (Issued 10,000 shares of $50 par value preferred stock at $60 per share) 600,000 Capital Stock Cash 15 15.000 15.000 (Purchased 1,000 shares of common stock for the treasury at $15 per share) 31 Cash 8,000 Capital Stock Gain on Sale of Stock 5,000 3,000 (Sold 500 shares of treasury stock at $16 per share)