Question Details

inexperienced accountant for Olsen Corporation



An inexperienced accountant for Olsen Corporation made the following entries.

July	1	Cash		240,000
			Common Stock			240,000
				(Issued 15,000 shares of no-par common stock, stated value $10 per share)

Sept.	1	Common Stock		32,000
		Retained Earnings		4,000
			Cash			36,000
				(Purchased 2,000 shares issued on July 1 for the treasury at $18 per share)

Dec.	1	Cash		20,000
			Common Stock			16,000
			Gain on Sale of Stock			4,000
				(Sold 1,000 shares of the treasury stock at $20 per share)

Instructions
(a)	On the basis of the explanation for each entry, prepare the entry that should have been made for the transactions. (Omit explanations.)
(b)	Prepare the correcting entries that should be made to correct the accounts of Olsen Corporation. (Do not reverse the original entry.)





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