Homework Answers
PROPORTIONAL METHOD
JOURNAL ENTRY
| Cash | 27102 | |
| Common Stock (par value) | 18648 | |
| Additional Paid-In Capital | 8454 |
| Cash | 11774 | |
| Preferred Stock(par value ) | 7714 | |
| Additional Paid-In Capital | 4060 |
working notes
| Fair Market Value of Common Stock (333 shares at $57.00 per share) | $18981 |
| Fair Market Value of Preferred Stock (133 shares at $62.00 per share) | $8246 |
| Fair Market Value of Lump-Sum Purchase | $27227 |
| Allocation to Common Stock ($18981 / $27227) x $38876 | $27102 |
| Allocation to Preferred Stock ($8246 / $27227) x $38876 | $11774 |
| Total Allocation of Lump-Sum Purchase | $38876 |
2.THE INCREMENTAL METHOD
JOURNAL ENTRY
| Cash | 18648 | |
| Common Stock(PAR VALUE ) | 18648 | |
| Additional Paid-In Capital | N/A |
| Cash | 20228 | |
| Preferred Stock | 7714 | |
| Additional Paid-In Capital | 12514 |
WORKING NOTES
| Allocation to Common Stock (333 shares at $56.00 per share) | $18648 |
| Fair Market Value of Lump-Sum Purchase | $38876 |
| Allocation to Preferred Stock | $20228 |
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Exercise I: Coke Corporation issued 333 shares of 556 par value common stock and 133 shares...
Exercise I: Coke Corporation issued 333 shares of 556 par value common stock and 133 shares...
Exercise I: Coke Corporation issued 333 shares of 556 par value common stock and 133 shares of $58 par value preferred stock for a lump sum of $38876. The common stock has a market value of 557 per share, and the preferred stock has a market value of $62 per share. Prepare the journal entry of allocating proceeds in two methods: 1. the proportional method and 2. the incremental method (in this case assume the value of the preferred stock...
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