Rhoads Corporation Is Authorized to Issue 250,000 Shares of $50

question 175

Essay

Rhoads Corporation is authorized to issue 250,000 shares of $50 par, 10%, noncumulative, nonparticipating preferred stock and 5,000,000 shares of no-par common stock. Prepare journal entries to record the following selected transactions that occurred during this year:
Feb. 1 Issued 10,000 shares of common stock for $30 cash per share.
15 Exchanged 2,000 shares of preferred stock for equipment and merchandise inventory with market values of $80,000 and $30,000, respectively.

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Definitions:

Coase Theorem

A theory asserting that if property rights exist and transaction costs are low, externalities can be efficiently resolved through private negotiations regardless of the initial allocation of property.

Externality

An indirect outcome or repercussion of business or industrial activities that impacts external entities without being accounted for in the pricing of the involved products or services.

Acid Rain

Precipitation that contains a high level of sulfuric or nitric acids, often due to air pollution from burning fossil fuels.

Emotional Intelligence

A capacity for recognizing our own feelings and those of others, motivating ourselves, and managing emotions well in ourselves and in our relationships.