Question

Blue Inc. issues 500 shares of $10 par value common stock and 100 shares of $100 par value preferred stock for a lump sum of $121,000. Prepare the journal entry for the issuance when the market price of the common shares is $164 each and market price of the preferred is $205 each. (b) Prepare the journal entry for the issuance when only the market price of the common stock is known and it is $212 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 (a) Cash Common Stock Paid-in Capital in Excess of Par - Common Stock Preferred Stock Paid-in Capital in Excess of Par-Preferred Stock

Answer 1

a)
		Debit	Credit
	Cash	$         1,02,500
	Common stock		$           5,000
	Paid-In-Capital in Excess Of Par - Common Stock		$         77,000
	Preferred stock		$         10,000
	Paid-In-Capital in Excess Of Par - Preferred Stock		$         10,500
	( to record issuance of common and prefered stock)
Working Note:
	Cash =(164*500 Shares)+(205*100 Shares)		$     1,02,500
	Common stock =500*10		$           5,000
	Paid-In-Capital in Excess Of Par - Common Stock =154*500		$         77,000
	Preferred stock =100*100		$         10,000
	Paid-In-Capital in Excess Of Par - Preferred Stock =105*100		$         10,500
b)
		Debit	Credit
	Cash	$         1,16,000
	Common stock		$           5,000
	Paid-In-Capital in Excess Of Par - Common Stock		$     1,01,000
	Preferred stock		$         10,000
	( to record issuance of common and prefered stock)
	Cash =(212*500 Shares)+($100*100 Shares)		$     1,02,500
	Common stock =500*10		$           5,000
	Paid-In-Capital in Excess Of Par - Common Stock =202*500		$         77,000
	Preferred stock =100*100		$         10,000
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