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Headland Inc. issues 500 shares of $10 par value common stock and 100 shares of $100 par value preferred stock for a lump sum of $117,000. (a) Prepare the journal entry for the issuance when the market price of the common shares is (b) Prepare the journal entry for the issuance when only the market price of the common stock is $176 each and market price of the preferred is $220 each. known and it is $204 per share. (Round answers to 0 decimal places, e.g. $1,225. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select No Entry for the account titles and enter O for the amounts.) No. Account Titles and Explanation Debit Credit

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0. Account Titles and Explanation Debit Credit (a)Cash S 117,000 Common Stock Paid in capital in Excess of par - Common Stock Preferred Stock Paid in Capital in Excess of par Preferred Stock S5,000 S 88,600 S 10,000 S 13,400 (b)Cash S 117,000 Common Stock Paid in capital in Excess of par Common Stock Preferred Stock Paid in Capital in Excess of par - Preferred Stock S5,000 S 97,000 S 10,000 S5,000 Working Notes: a. Common stock- 500 $10 $5,000 Preferred Stock-100 $100- $10,000 Market value of Common stock 500 176 $88,000 Market value of Preferred Stock 100 $220 $22,000 Lump sum value of stock = $88.000+$22.000 = $110,000 Paid in capital in Excess of par - Common Stock (S88,000/$110,000*S117,000) -S5,000 S88,600 Paid in Capital in Excess of par - Preferred Stock -(S22,000/S110,000 S117,000)-S10,000 S13,400 b. Paid in capital in Excess of par - Common Stock 500 S204 $102,000-S5000 S97,000 Paid in Capital in Excess of par-Preferred Stock = $117.000-$102.000-$10.000 = $5,000

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