Financial Accounting: An Integrated Statements Approach, 2nd Edition

Jan. 5 Issued 10,000 shares of common stock at par for cash.

18 Issued 100 shares of common stock at par to an attorney in payment of legal fees for

organizing the corporation.

Feb. 13 Issued 4,250 shares of common stock in exchange for land, buildings, and equipment with

fair market prices of $50,000, $280,000, and $120,000, respectively.

Apr. 1 Issued 3,500 shares of preferred stock at $52 for cash.

Journalize the transactions.

On December 15, 2004, Las Vegas Sands Corp., owner of the Venetian Hotel in Las Vegas, con-

ducted an initial public offering of 23.8 million shares of $0.001 par value common stock at a

price of $29 per share. The price of the common stock rose to $46.56 by the end of the day’s trad-

ing on the New York Stock Exchange. Goldman Sachs Group, Inc., and Citicorpwere the lead

underwriters of the initial public offering.

a. Journalize the entry for the initial public offering, assuming an underwriting fee of 0.5%

of the IPO proceeds to be paid to the underwriters.

b. What services do Goldman Sachs Group, Inc., and Citigroup provide in the IPO?

c. Describe the primary and secondary markets in this transaction.

d. Who received the increase in share price on the first day of trading, and what was their

percentage return?

Crystal Springs Inc. bottles and distributes spring water. On June 1 of the current year, Crystal

reacquired 2,500 shares of its common stock at $60 per share. On July 8, Crystal sold 1,500 of the

reacquired shares at $65 per share. The remaining 1,000 shares were sold at $58 per share on

November 2.

a. Journalize the transactions of June 1, July 8, and November 2.

b. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the

current year?

c. For what reasons might Crystal Springs have purchased the treasury stock?

Geyser Inc. develops and produces spraying equipment for lawn maintenance and industrial

uses. On March 3 of the current year, Geyser Inc. reacquired 7,500 shares of its common stock

at $120 per share. On August 11, 4,000 of the reacquired shares were sold at $130 per share, and

on October 3, 2,500 of the reacquired shares were sold at $124.

a. Journalize the transactions of March 3, August 11, and October 3.

b. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the

current year?

c. What is the balance in Treasury Stock on December 31 of the current year?

d. How will the balance in Treasury Stock be reported on the balance sheet?

Aspen Inc. manages resort properties. On August 1 of the current year, Aspen Inc. reacquired

12,000 shares of its common stock at $36 per share. On September 23, Aspen Inc. sold 7,500 of

the reacquired shares at $38 per share. The remaining 4,500 shares were sold at $33 per share on

December 29.

a. Journalize the transactions of August 1, September 23, and December 29.

b. What is the balance in Paid-In Capital from Sale of Treasury Stock on December 31 of the

current year?

518 Chapter 11 Stockholders’ Equity: Capital Stock and Dividends

Exercise 11-9

Issuing an IPO

Goals2, 3

Exercise 11-10

Treasury stock transactions

Goal 4

b. $5,500 credit

Exercise 11-11

Treasury stock transactions

Goals4, 8

b. $50,000 credit

Exercise 11-12

Treasury stock transactions

Goals4, 8

b. $1,500 credit