Willow Creek Nursery, with an authorization of 75,000 shares of preferred stock and 200,000 shares of common stock

Willow Creek Nursery, with an authorization of 75,000 shares of preferred stock and 200,000 shares of common stock, completed several transactions involving its stock on October 1, the first day of operations. The trial balance at the close of the day follows:














Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,780,000
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 840,000
Buildings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,380,000
Preferred 1% Stock, $80 par. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,800,000
Paid-In Capital in Excess of Par—Preferred Stock. . . . . . . . . . . . . . . . . . . 420,000
Common Stock, $30 par . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,600,000
Paid-In Capital in Excess of Par—Common Stock . . . . . . . . . . . . . . . . . . . 180,000
7,000,000 7,000,000

All shares within each class of stock were sold at the same price. The preferred stock was issued in exchange for the land and buildings.

Journalize the two entries to record the transactions summarized in the trial balance.


Answer:












Oct. 1 Cash (120,000 shares × $31.50) 3,780,000
Common Stock (120,000 shares × $30.00) 3,600,000
Paid-In Capital in Excess of Par—
Common Stock [120,000 shares × ($31.50 – $30.00)] 180,000
Oct. 1 Buildings 2,380,000
Land 840,000
Preferred Stock (35,000 shares × $80) 2,800,000
Paid-In Capital in Excess of Par—
Preferred Stock [35,000 shares × ($92 – $80)] 420,000