Question

Issuances of Stock Cada Corporation is authorized to issue 10,000 shares of $100 par, convertible, callable pre- ferred stock and 80,000 shares of no par, no-stated-value common stock. There are currently 7,000 shares of pre- ferred and 30,000 shares of common stock outstanding. The following are several alternative transactions 1. Purchased land by issuing 640 shares of preferred stock and 1,000 shares of common stock. Preferred and com mon are currently selling at $113 and $36 per share, respectively. No reliable appraisal of the land is available Same as Transaction 1, except that land is appraised at $104,000, and the preferred stock has no current market v. alue 3. Issued, for $99,000 cash, a combination of 400 shares of preferred stock and bonds payable with a face value of S50,000. Currently, the preferred stock is selling for $120 per share and the bonds at 104 Same as Transaction 3, except that the bonds do not have a current market value. Same as Transaction 3, except that the preferred stock does not have a current market value. Preferred sharcholders (who had originally paid the corporation $110 per share for their stock) convert 6,500 preferred shares into 19,500 shares of common stock. The current market prices of the preferred stock and the ommon stock are $120 and $41 per share, respectively The corporation calls the 7,000 shares of preferred stock (originally issued at $110 per share) at $123 per share Common stock is currently selling for $42 per share. Sharcholders elect not to convert into common stock. Same as Transaction 7, except that shareholders owning 2,000 shares of preferred stock elect to convert each share into 3 shares of common stock. The remaining 5,000 preferred shares are retired 4. 5. 6. 7. 8. Required: Next Level Prepare the journal entry necessary to record each transaction. Below each entry, explain your reason for the values used

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Answer 1

In the books of Cada Corporation :

Transaction/ Event	Account Titles	Debit	Credit
		$	$
1.	Land	108,320
	Preferred Stock ( 640 x $ 100)		64,000
	Common Stock ( 1,000 x $ 36 )		36,000
	Additional Paid-in Capital: Preferred Stock		8,320
2.	Land	104,000
	Preferred Stock ( 640 x $ 100)		64,000
	Common Stock		36,000
	Additional Paid-in Capital: Preferred Stock		4,000
3.	Cash	99,000
	Bonds Payable		50,000
	Premium on Bonds Payable		2,000
	Preferred Stock ( 400 x $ 100)		40,000
	Additional Paid-in Capital;: Preferred Stock		7,000
4.	Cash	99,000
	Bonds Payable		50,000
	Preferred Stock ( 400 x $ 100)		40,000
	Additional Paid-in Capital; : Preferred Stock		9,000
5.	Cash	99,000
	Bonds Payable		50,000
	Premium on Bonds Payable		9,000
	Preferred Stock ( 400 x $ 100)		40,000
6.	Retained Earnings	84,500
	Preferred Stock ( 6,500 x $ 100)	650,000
	Additional Paid-in Capital : Preferred Stock	65,000
	Common Stock ( 19,500 x 41 )		799,500
7.	Preferred Stock	700,000
	Additional Paid-in Capital : Preferred Stock	70,000
	Retained Earnings	91,000
	Cash		861,000
8.	Preferred Stock	700,000
	Additional Paid-in Capital: Preferred Stock	70,000
	Retained Earnings	97,000
	Common Stock ( 2,000 x 3 x $ 42)		252,000
	Cash ( 5,000 x $ 123)		615,000