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In: Accounting

Exercise 18-9 (Algo) New equity issues; offerings announcements [LO18-4] When companies offer new equity security issues,...

Exercise 18-9 (Algo) New equity issues; offerings announcements [LO18-4]

When companies offer new equity security issues, they publicize the offerings in the financial press and on Internet sites. Assume the following were among the equity offerings reported in December 2021:

New Securities Issues
Equity
American Materials Transfer Corporation (AMTC)—8.5 million common shares, $0.001 par, priced at $13.952 each through underwriters led by Second Tennessee Bank N.A. and Morgan, Dunavant & Co.,
according to a syndicate official.
Proactive Solutions Inc. (PSI)—Offering of 9 million common shares, $0.01 par, was priced at $14.80 a
share via lead manager Stanley Brothers, Inc., according to a syndicate official.


Required:
Prepare the appropriate journal entries to record the sale of both issues to underwriters. Ignore share issue costs. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.

Solutions

Expert Solution

Answer:

Books of AMTC
Date Account Titles & Explanation Debit ($) Credit ($)
December 2021 Cash ( 8500000 x 13.952 ) 118,592,000
Common Stock ( 8500000 x 0.001 )                   8,500
Paid-in Capital in Excess of Par value-Common Stock      118,583,530
(To record the issue of 8.5 million common shares $0.001 par , at $13.952 per share )
Books of PSI
Date Account Titles & Explanation Debit ($) Credit ($)
December 2021 Cash ( 9,000,000 x 14.80)        133,200,000
Common Stock ( 9,000,000 x 0.01 )                 90,000
Paid-in Capital in Excess of Par value-Common Stock      133,110,000
(To record the issue of 9 million common shares $0.01 par , at $14.80 per share )

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