A Company Is Authorized to Issue 50,000 Shares of $50

question 27

Essay

A company is authorized to issue 50,000 shares of $50 par,10%,noncumulative,nonparticipating preferred stock and 500,000 shares of no-par common stock.Prepare journal entries to record the following selected transactions that occurred during this year:
$\begin{array}{|c|l|}\hline\text { Mar. 1 } & \text { Issued 1,000 shares of common stock for } \$ 30 \text { cash per share. } \\\hline 15 & \begin{array}{l}\text { Exchanged 2,000 shares of preferred stock for equipment and Merchandise } \\\text { inventory with market values of } \$ 90,000 \text { and } \$ 20,000, \text { respectively. }\end{array} \\\hline\end{array}$

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Definitions:

Enron Corp.

An American energy company based in Houston, Texas, that famously collapsed in 2001 due to widespread corporate fraud and corruption.

Diversified

A strategy that involves spreading investments across various financial assets, industries, or other categories to reduce risk.

Market Risk

The risk of losses in investments due to factors that affect the overall performance of the financial markets.

Systematic Risk

The overall impact of market-wide phenomena on the value of investments, as opposed to risks that are specific to a particular investment.