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Presented below is information related to Wyrick Company:(1.) The company is granted a charter that authorizes issuance of 15,000 shares of $100 par value preferred stock and 40,000 shares of no-par common stock.(2.) 8,000 shares of common stock are issued to the founders of the corporation for land valued by the board of directors at $300,000. The board establishes a stated value of $5 per share for the common stock.(3.) 5,000 shares of preferred stock are sold for cash at $120 per share.(4.) The company issues 100 shares of common stock to its attorneys for costs associated with starting the company. At that time, the common stock was selling at $60 per share.Instructions:Prepare the general journal entries necessary to record these transactions.

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Answer and Explanation:

The journal entries are shown below:

1.   No journal entry is required  

2.   Land    300,000  

                 Common Stock                40,000  

                Paid-in Capital in Excess  

                 of Stated Value      260,000

(Being the land is purchased by the issue of the shares)

3.   Cash       600,000  

                 Preferred Stock                 500,000

                 Paid-in Capital in Excess

                of Par—Preferred Stock     100,000

(Being the preferred stock is issued for cash)

4.   Organization Expense    6,000

                  Common Stock                 500

                  Paid-in Capital in Excess

                  of Stated Value    5,500

(Being organizaiton expense is recorded)

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