Question

Current Attempt in Progress Stellar Corporation's charter authorized issuance of 100,000 shares of $10 par value common stock and 53,400 shares of $50 preferred stock. The following transactions involving the issuance of shares of stock were completed. Each transaction is independent of the others. 1. 2. Issued a $9,500,9% bond payable at par and gave as a bonus one share of preferred stock, which at that time was selling for $103 a share. Issued 480 shares of common stock for equipment. The equipment had been appraised at $7,100; the seller's book value was $6,700. The most recent market price of the common stock is $15 a share. Issued 358 shares of common and 90 shares of preferred for a lump sum amounting to $10,200. The common had been selling at $13 and the preferred at $60. Issued 220 shares of common and 51 shares of preferred for equipment. The common had a fair value of $15 per share; the equipment has a fair value of $6,000 3. 4. Record the transactions listed above in journal entry form. (Round Round intermediate calculations to 6 decimal places, e.g. 0.546872 and final answers to decimal places, eg. $38,487. 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 Ofor the amounts.)

Answer 1

	Particulars	Debit	Credit
1)	Cash	9500
	Discount on bonds payable	103
	Preferred stock, $50 par		50
	Paid in capital in excess of par-Preferred stock ($103-$50)		53
	Bonds payable		9500
2)	Equipment ($15*460)	7200
	Common stock(480*10)		4800
	Paid in capital in excess of par(480*5)		2400
	Note:
	The stock price is to be used if it is regularly traded; otherwise fair value
	should be used.
3)	Cash	10200
	Common stock, $10 par		3580
	Paid in capital in excess of par-Common stock		978
	Preferred stock, $50 par		4500
	Paid in capital in excess of par-Preferred stock		1142
	Workings:
	FV of common stock = 358*10 =	3580
	FV of preferred stock = 90*50 =	4500
	Total fair value	10200
	Paid in capital in excess of par-Common stock=[(90*60)/(358*13+60*90)*10200]-4500=978 Paid in capital in excess of par-Preferred stock= [(358*13)/(358*13+60*90)*10200]-3580=4722-3580=1142
4)
	Equipment	6500
	Common stock, $10 par		2200
	Paid in capital in excess of par-Common stock		150
	Preferred stock, 51 $50 par		2550
	Paid in capital in excess of par-Preferred stock		1100
	Workings:
	Fair value of equipment	6000
	Paid in capital in excess of par-Common stock	(6000-(220*15)-2550=150
	Paid in capital in excess of par-Preferred stock	(220*15-2200)=1100

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