Journalize the Transactions for the Stock Subscription Plan for Rico

question 77

Essay

Journalize the transactions for the stock subscription plan for Rico Company.On February 1,Rico received subscriptions for 50 shares of $9 par value common stock at $16 per share.The buyer will pay two equal installments on March 1 and June 1.Assume all payments are made as scheduled and the company issues the stock after the June 1 collection.

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Definitions:

Warranty of Authority

A representation that a person who purports to act on behalf of another (an agent) has the necessary authority to do so.

Bankruptcy

A legal process for individuals or businesses that are unable to repay their outstanding debts, allowing for the distribution of assets to creditors, potentially leading to the discharge of remaining debts.

Agency Termination

The process of ending the relationship between an agent and their principal, which can occur for various reasons such as fulfillment of the agency purpose or mutual agreement.

Principal and Third Party

Legal terms describing the major participant in a transaction (principal) and an outsider who has a lesser role (third party).