Question

Nancy Corporation agreed to sell all of its capital stock to Eddie Corporation for three monthly payments

of $100,000. After Eddie made the first required payment, it ceased making other payments. The stock

subscription agreement states that Eddie, thus, forfeits its payments and is entitled to no other future

consideration. How should Nancy record the $100,000 forfeited payment?

Week 1 In a minimum of five to seven sentences, describe your initial thoughts regarding the case and the challenges that you feel that you will face with regards to the depth and complexity of the issues that will be addressed.

Week 2In a minimum of five to seven sentences, summarize the background of your case and indicate any assumptions that you are making regarding the case. Define your problem statement and research question(s).

Week 3In a minimum of five to seven sentences, identify the key terms in your case and state why you believe that each one is relevant to your case.

Week 4Gather data from multiple sources and present that data in one to two pages (12-point, double spaced). Be sure to document your sources.

Week 5Organize and interpret the findings of your research in one to two pages (12-point, double spaced).

Week 6Develop your recommendations and conclusions, and state them and their rationale in one to two pages (12-point, double spaced).

Week 7Using the guidelines above, prepare a comprehensive research memorandum on the case that you chose.

Week 8Prepare a PowerPoint Presentation communicating your case facts, authoritative literature, recommendations, and conclusion. Please use the Notes section of the PowerPoint to communicate what you would be communicating verbally.

I don't see any other same questions. This is what I posted. Can you please answer this question?

The case is on the top. "Nancy company"

Answer 1

Nancy Corporation Should

1. Debit the equity share capital account with amount equivalent to the $100000 if its at par.
2. Credit the forfeited share account with the similar amount.

The forfeited share amount, till it is reissued, thus will be added to paid up capital of the company and and shown in the notes to account of share capital.

The reason being such a treatment is since the company has already received the said amount it can show it as a paid up capital. The adjusting entry will be done in the transaction where the company reissues the shares.
If the company reissues it at a discount it is bound to use this forfeited share amount to provide discount.The discount can be maximum to the amount such that the forfeited amount is used.In this case if shares are reissued the maximum discount allowed would be $100000.