In: Accounting
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 $14.80 a share via lead manager Stanley Brothers, Inc., according to a syndicate official. |
Required:
Prepare the appropriate journal entries to record the sale of both
issues to underwriters. Ignore share issue costs. (If no
entry is required for a transaction/event, select "No journal entry
required" in the first account field. Enter your answers in whole
dollars.
Answer:
Books of AMTC | |||
Date | Account Titles & Explanation | Debit ($) | 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 ) | |||