Entries for Issuing Par StockOn October 31, Legacy Rocks Inc., a marble contractor, issued for cash 400,000 shares of $10 par common stock at $18, and on November 19, it issued for cash 50,000 shares of preferred stock, $75 par at $80.a. Journalize the entries for October 31 and November 19.For a compound transaction, if an amount box does not require an entry, leave it blank. Prepare the Stockholders’ Equity section of the balance sheet as of June 30 using Method 1 ofExhibit 8Eighty thousand shares of common stock are authorized, and 9,000 shares have been reacquired. Refer to the lists of Accounts and Amount Descriptions provided for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtractive or negative numbers use a minus sign.

a) Journal Entries:

October 31:

Debit Cash Account $7,200,000

Credit Common Stock $4,000,000

Credit Additional Paid-in Capital- Common Stock $3,200,000

To record the issue of 400,000 shares of $10 par common stock at $18.

November 19:

Debit Cash Account $4,000,000

Credit Preferred Stock $3,750,000

Credit Additional Paid-in Capital - Preferred Stock $250,000

To record the issue of 50,000 shares of preferred stock, $75 par at $80.

b) Stockholders' Equity Section of the balance sheet as of June 30:

Authorized Share Capital

Issued Share Capital-Common Stock 400,000

 shares at $10 par                                                   $4,000,000

Additional Paid-in Capital- Common Stock              3,200,000

Treasury Stock                                                               (90,000)

Issued Share Capital - Preferred Stock 50,000

 shares at $75 par                                                    3,750,000

Additional Paid-in Capital - Preferred Stock               250,000

Explanation:

Journal entries are used to debit and credit accounts for each transaction that occurs on a daily basis.  They are the initial entries made in the books of account.  From the journal entries, the accounts are posted to the general ledger where they are summarized for the period.

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