Question

Current Attempt in Progress Parker Corporation has issued 1.700 shares of common stock and 340 shares of preferred stock for a lump sum of $63,000 cash. (a) Give the entry for the issuance assuming the par value of the common stock was $5 and the fair value $30, and the par value of the preferred stock was $40 and the fair value $50. (Each valuation is on a per share basis and there are ready markets for each stock) (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 for the amounts) Account Titles and Explanation Credit 63000 Cash Debit Preferred Stock Paid-in Capital in Excess of Par. Preferred Stock Common Stock Paid in Capital in Excess of Par. Common Stock e Textbook and Media List of Accounts

Answer 1

Answer:

we will use apportionment method:

Total market value of all shares: (1700*30)+(340*50)=51000+17000=$68,000

For common stock: 63000*51000/68000=47,250

For preferred stock: 63000*17000/68000=15,750

Entry would be:

Calculation: Account Titles and Explanation Cash Preferred Stock Paid-in-capital in Excess of Par-Preferred Stock Common Stock Paid-in-capital in Excess of Par-Common Stock Debit Credit 63,000 13,600 2,150 8,500 38,750 =340*40 =15750-(340*40) =1700*5 =47,250-(1700*5)

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