1. | Under Proportional method: | ||||||
Proceeds are allocated to each class of security based on the fair market value of each class of security. | |||||||
Security | Calculation | Fair value | Proportion of total | Allocation of lump sum $38,876 | |||
Common stock | 333 x $57 | $18,981 | 0.6971 | 27,101.97 | |||
Preferred stock | 133 x $62 | $8,246 | 0.3029 | 11,774.03 | |||
$27,227 | 1.0000 | 38,876.00 | |||||
Bank | Dr. | 38,876.00 | |||||
To Common stock | 27,101.97 | ||||||
To Preferred stock | 11,774.03 | ||||||
2. | Under Incremental method: | ||||||
Proceeds are first allocated to those securities with a known market value, balance is then allocated to the security with an unknown value. | |||||||
Security | Calculation | Fair value | Allocation of lump sum $38,876 | ||||
Common stock | 333 x $57 | $18,981 | $18,981 | ||||
Preferred stock | NA | NA | $19,895 | Balance allocated | |||
38,876.00 | |||||||
Bank | Dr. | 38,876.00 | |||||
To Common stock | 18,981.00 | ||||||
To Preferred stock | 19,895.00 | ||||||
Exercise I: Coke Corporation issued 333 shares of S56 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...
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...
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...
Ravonette Corporation issued 300 shares of $10 par value common stock and 100 shares of $50 par value preferred stock for a lump sum of $13,500. The common stock has a market price of $20 per share and the preferred stock has a market price of $90 per share. What is the dollar amount which will be credited to the PIC in excess of par - preferred stock?
Waterway Corporation issued 342 shares of $10 par value common stock and 150 shares of $50 par value preferred stock for a lump sum of $19,656. The common stock has a market price of $20 per share, and the preferred stock has a market price of $100 per share. Prepare the journal entry to record the issuance.
1. Swifty Corporation issued 309 shares of $10 par value common stock and 141 shares of $50 par value preferred stock for a lump sum of $18,252. The common stock has a market price of $20 per share, and the preferred stock has a market price of $100 per share. Prepare the journal entry to record the issuance 2. Oriole Corporation issued 530 shares of $100 par value preferred stock for $64,400. Prepare Oriole’s journal entry. 3. The common stock...
Sheridan Company issued 5900 shares of its $10 par value common stock having a fair value of $25 per share and 8400 shares of its $10 par value preferred stock having a fair value of $20 per share for a lump sum of $252000. The proceeds allocated to the preferred stock is О $117813 $169800 О $168000 О $134187
Sweet Corporation issued 368 shares of $10 par value common stock and 123 shares of $50 par value preferred stock for a lump sum of $16,587. The common stock has a market price of $20 per share, and the preferred stock has a market price of $90 per share. Prepare the journal entry to record the issuance. (Round intermediate calculations to 6 decimal places, e.g. 0.546872 and final answers to 0 decimal places, e.g., 1,520. Credit account titles are automatically...
Brief Exercise 15-4 Culver Corporation issued 328 shares of $10 par value common stock and 113 shares of $50 par value preferred stock for a lump sum of $15,057. The common stock has a market price of $20 per share, and the preferred stock has a market price of $90 per share. Prepare the journal entry to record the issuance. (Round intermediate calculations to 6 decimal places, e.g. 0.546872 and final answers to O decimal places, e.g., 1,520. Credit account...
Sheridan Corporation issued 368 shares of $10 par value common
stock and 123 shares of $50 par value preferred stock for a lump
sum of $16,587. The common stock has a market price of $20 per
share, and the preferred stock has a market price of $90 per
share.
Prepare the journal entry to record the issuance.
(Round intermediate calculations to 6 decimal places,
e.g. 0.546872 and final answers to 0 decimal places, e.g., 1,520.
Credit account titles are automatically...