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Angel Corporation is authorized to issue 1,000,000 shares of K4 par value common stock. In its first year, the company has the following stock transactions. Jan. 10. Issued 400,000 shares of stock at K7 per share.. July1. Issued 100,000 shares of stock for land. The land had an asking price of K900, 000. The stock is currently selling on Lusaka stock exchange at K7.25 per share. Sept. 1. Purchased 10, 000 shares of common stock for the treasury at K9 per share. Dec. 1. Sold 4, 000 shares of the treasury stock at K10 per share. Instructions (i) Journalize the transactions. (ii) Prepare the stockholders' equity section assuming the company had retained earnings of K200, 000 at December 31.

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(i) The following are the journal entries for Angel Corporation's stock transactions:Jan. 10. Issued 400,000 shares of stock at K7 per share.DateAccountsDebitCreditJan. 10Cash2,800,000Common Stock400,000Paid-in Capital in Excess of Par Value2,400,000July 1. Issued 100,000 shares of stock for land.DateAccountsDebitCreditJuly 1Land900,000Common Stock100,000Paid-in Capital in Excess of Par Value800,000Sept. 1. Purchased 10,000 shares of common stock for the treasury at K9 per share.DateAccountsDebitCreditSept. 1Treasury Stock90,000Cash90,000Dec. 1. Sold 4,000 shares of the treasury stock at K10 per share.DateAccountsDebitCreditDec. 1Cash40,000Treasury Stock36,000Paid-in Capital in Excess of Cost4,000(ii) The stockholders' equity section assuming the company had retained earnings of K200,000 at December 31 is as follows:Angel Corporation Stockholders' EquitySectionDecember 31Common Stock($4,000,000 shares authorized,$500,000 issued)$500,000Paid-in Capital in Excess of Par Value ($2.25 per share on 400,000 shares)900,000Paid-in Capital from Sale of Treasury Stock4,000Retained Earnings200,000Total Stockholders' Equity$1,604,000The following information has been used:Common stock: 400,000 shares at K4 par value = $500,000Paid-in capital in excess of par value: (K7 - K4) = K3 x 400,000 shares = K1,200,000Paid-in capital in excess of cost of treasury stock: K1 per share x 4,000 shares = K4,000Retained earnings: Given = K200,000Total stockholders' equity: $500,000 + K1,200,000 + K4,000 + K200,000 = $1,604,000

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