Question

Brief Exercise 15-4 Wildhorse Corporation issued 311 shares of $10 par value common stock and 112 shares of $50 par value preferred stock for a lump sum of $15,678. 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. (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 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.) Account Titles and Explanation

Answer 1

Solution:

Calculations :

Total market value of 311 shares of common stock = 311 * $20 = $6,220

Total market value of 112 shares of preferred stock = 112 * $100 = $11,200

Total market value = $17,420

Lump sum of $15,678 is distributed to common stock and preffered stock in ratio of market value

Proportionate value of common stock = $15,678 * $6,220 / $17,420 = $5,598

Proportionate value of preferred stock = $15,678 * $11,200 / $17,420 = $10,080

Journal entry

Account titles and explanation	Debit($)	Credit($)	Calculation
Cash A/c Dr	$15,678
To Common stock A/c		$3,732	(311 * $12)
To Additional paid in capital - common stock A/c		$1,866	($5,598 - $3,732)
To Preffered stock A/c		$5,600	(112 * $50)
To Additional paid in capital - Preffered stock A/c		$4,480	($10,080 - $5,600)