Pronghorn Corporation issued 392 shares of $10 par value common stock and 128 shares of $50...

Pronghorn Corporation issued 392 shares of $10 par value common stock and 128 shares of $50 par value preferred stock for a lump sum of $17,424. The common stock has a market price of $20 per share, and the preferred stock has a market price of $90 per share.

Prepare the journal entry to record the issuance.

Expert Solution

Journal entry as asked

Accounts title	Debit	Credit
Cash	$17,424
Common Stock		$3,920
Paid in Capital in excess of Par - Common Stock		$3,136
Preferred Stock		$6,400
Paid in Capital in excess of Par - Preferred Stock		$3,968
(Stock issued for cash)

Working for above amounts

	No. of shares	Market Price	Total	Percent of total [not rounded off]
Common Stock	392	$20	$7,840	40.4958678%
Preferred Stock	128	$90	$11,520	59.5041322%
Total fair Market Value			$19,360	100.0000000%

Working		Common Stock	Preferred Stock
A	Total Lumpsum Issue Price	$17,424	$17,424
B	Allocation %	40.495868%	59.504132%
C = A x B	Total	$7,056	$10,368
D	No. of shares	392	128
E	Par Value	$10	$50
F = D x E	Capital Stock credited by	$3,920	$6,400
G = C - F	Paid in Capital credited by	$3,136	$3,968

ekkarill92 answered 7 months ago

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