Question

*Exercise 15-5 ZYour answer is partially correct. Try again. Stellar Inc. issues 500 shares of $10 par value common stock and 100 shares of $100 par value preferred stock for a lump sum of $123,000. (a) Prepare the journal entry for the issuance when the market price of the common shares is $168 each and market price of the preferred is $210 each. (b) Prepare the journal entry for the issuance when only the market price of the common stock is known and it is $216 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 0 for the amounts.) No. Account Titles and Explanation Credit Debit (a) Cash [123000 Paid-in Capital in Excess of Par - Common Stock Common Stock Paid-in Capital in Excess of Par - Preferred Stock Preferred Stock (b) Cash [123,000] Paid-in Capital in Excess of Par - Common Stock Common Stock Paid-in Capital in Excess of Par - Preferred Stock Preferred Stock

Answer 1

Solution: Credit (8) NO (a) $93,400 $14,500 Journal Entries ACCOUNE Titles and Explanation Debit (8) Cash $123,000 paid in capital in excess of par-common stock ($98,400 - $5,000) paid in capital in excess of . par-preferred stock ($24.600-$10,000) common stock (500x810). Preferrea stock (100+$100) cash $123,000 common stock (soox $10) preferred stock (100x8100) • paid in capital in excess of Pay-common stock ($ 108,000-$5,000) paid in capital in excess of par --preferred stock (5 15 100-$10.000) $ 5,000 $10,000 (6) LINE $5,000 $10.000 $163,000 $ 5.000

Explanation: (9) Fair value of common (Soox-8162) Fair value of preferred (100+$210) $84.000 $ 21.000 $105,000 Allocated to common. ($ 84,000 filosooby $123,000 $98,400 Allocated to preleted! ($27,000 $105,000)*$123,000 $24.600 $123,000 (b) Lump-sum receipt Allocated to common (500x8216) Balance allocated to preferred $123,000 $408.000) $ 15,000

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