Larkspur Corporation was organized on January 1, 2020. It is authorized to issue 10,900 shares of 8%, $100 par value preferred stock, and 507,800 shares of no-par common stock with a stated value of $1 per share. The following stock transactions were completed during the first year. Jan. 10 Issued 80,990 shares of common stock for cash at $7 per share.
Mar. 1 Issued 5,280 shares of preferred stock for cash at $110 per share.
Apr. 1 Issued 24,410 shares of common stock for land. The asking price of the land was $90,500; the fair value of the land was $80,990.
May 1 Issued 80,990 shares of common stock for cash at $9 per share.
Aug. 1 Issued 10,900 shares of common stock to attorneys in payment of their bill of $53,200 for services rendered in helping the company organize.
Sept. 1 Issued 10,900 shares of common stock for cash at $11 per share.
Nov. 1 Issued 1,090 shares of preferred stock for cash at $114 per share.

Required:
Prepare the journal entries to record the above transactions.

Larkspur Corporation

Journal Entries:

Jan. 10:

Debit Cash Account $566,930

Credit Common Stock $80,990

Credit APIC - Common Stock $485,940

To record the issue of 80,990 common stock shares for cash at $7 per share.

Mar. 1:

Debit Cash Account $580,800

Credit Preferred Stock $528,000

Credit APIC - Preferred Stock $52,800

To record the issue of 5,280 preferred stock shares for cash at $110 per share.

Apr. 1:

Debit Land $80,990

Credit Common Stock $24,410

Credit APIC - Common Stock $56,580

To record the issue of 24,410 common stock shares for land.

May 1:

Debit Cash Account $728,910

Credit Common Stock $80,990

Credit APIC - Common Stock $647,920

To record the issue of 80,990 common stock shares for cash at $9 per share.

Aug. 1:

Debit Attorney Fees $53,200

Credit Common Stock $10,900

Credit APIC - Common Stock $42,300

To record the issue of 10,900 common stock shares for attorney services rendered in helping the company organize.

Sept. 1:

Debit Cash Account $119,900

Credit Common Stock $10,900

Credit APIC - Common Stock $109,000

To record the issue of 10,900 common stock shares for cash at $11 per share.

Nov. 1:

Debit Cash Account $124,260

Credit Preferred Stock $109,000

Credit APIC - Preferred Stock $15,260

To record the issue of 1,090 shares of preferred stock for cash at $114 per share.

Explanation:

a) Data and Calculations:

Authorized share capital:

10,900 shares of 8%, $100 par value preferred stock

507,800 shares of no-par common stock with a stated value of $1 per share

b) In this case, some shares were issued above the their par values.  This gives rise to the creation of a capital account called Additional Paid-in Capital (APIC).  This account records the difference between the par value of shares and the issue prices.

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