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Parker Corporation has issued 1,700 shares of common stock and 340 shares of preferred stock for...

Parker Corporation has issued 1,700 shares of common stock and 340 shares of preferred stock for a lump sum of $62,000 cash.

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 0 for the amounts.)

Account Titles and Explanation	Debit	Credit

List of Accounts

Give the entry for the issuance assuming the same facts as the par value of the common stock was $5 and the fair value of $25 per share, and the par value of the preferred stock was $40 and has no ready market. (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	Debit	Credit

Expert Solution

Answer 1 .

Working Note :

Total fair value of common stock (1,700 shares * $30)	$51,000
Total fair value of preferred stock (340 shares * $50)	$17,000
Total	$68,000
Common Stock ; [($51,000 / $68,000) * $62,000]	$46,500
Preferred Stock ; [($17,000 / $68,000) * $62,000]	$15,500

Journal Entry :

Account Titles and Explanation

Debit

Credit

Cash

62,000

Common Stock (1,700 shares *$5)

8,500

Preferred Stock (340 shares *$40)

13,600

Paid-in Capital in Excess of Par - Common Stock ($46,500 - $8,500)

38,000

Paid-in Capital in Excess of Par - Preferred Stock ($15,500 - $13,600)

1,900

(To record lump sum purchase of common & preferred stocks)

Answer 2 :

Account Titles and Explanation	Debit	Credit
Cash	62,000
Common Stock (1,700 shares *$5)		8,500
Preferred Stock (340 shares *$40)		13,600
Paid-in Capital in Excess of Par - Common Stock [(1,700 shares *($25 - $5)]		34,000
Paid-in Capital in Excess of Par - Preferred Stock (Bal. fig)		5,900
(To record lump sum purchase of common & preferred stocks)

ekkarill92 answered 2 months ago

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