Klaus Herrmann, a biochemistry professor, organized Bioproducts, Inc., early this year. The firm will manufacture antibiotics using
Question:
Klaus Herrmann, a biochemistry professor, organized Bioproducts, Inc., early this year. The firm will manufacture antibiotics using gene splicing technology. Bioproducts' charter authorizes the firm to issue 5,000 shares of 12 percent, $50 par preferred stock and 100,000 shares of $10 par common stock. During the year, the firm engaged in the following transactions:
a. Issued 25,000 common shares to Klaus Herrmann in exchange for $275,000 cash.
b. Sold 10,000 common shares to a potential customer for $11 per share.
c. Issued 3,000 shares of preferred stock to a venture capital firm for $52 per share.
d. Gave 75 shares of common stock to Margaret Robb, a local attorney, in exchange for Margaret's work in arranging for the firm's incorporation. Margaret usually charges $900 for an incorporation.
Required:
Prepare a journal entry for each of these transactions.
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Step by Step Answer:
Cornerstones of Financial and Managerial Accounting
ISBN: 978-0324787351
1st Edition
Authors: Rich Jones, Mowen, Hansen, Heitger