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Exercise 11-2 Blossom Company had these transactions during the current period. June 12 Issued 78,000 shares of $1 par value common stock for cash of $292,500. July 11 Issued 2,500 shares of $100 par value preferred stock for cash at $104 per share. Nov. 28 Purchased 1,000 shares of treasury stock for $7,100.Prepare the journal entries for the Blossom Company transactions.

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Answer:

Explanation:

The journal entries are shown below:

1. Cash A/c Dr $292,500        

       To Common Stock $78,000        (78,000 × $1)

       To  Additional Paid-in Capital in excess of par - Common Stock $214,500

(Being the issue of the stock is recorded and the balance remaining is credited to the additional paid-in capital account)

2. Cash A/c Dr $260,000  (2,500 shares × $104)

       To Preferred stock $250,000       (2,500 shares × $100)

        To  Additional Paid-in Capital in excess of par - Preferred Stock $10,000

(Being the issue of the stock is recorded and the balance remaining is credited to the additional paid-in capital account)

3. Treasury stock A/c Dr $7,100

         To Cash A/c $7,100

(Being the treasury stock is purchased for cash)

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