Question

ndigo Inc. issues 500 shares of $10 par value common stock and 100 shares of $100 par value preferred stock for a lump sum of $121,000. (a) Prepare the journal entry for the issuance when the market price of the common shares is $164 each and market price of the preferred is $205 each. (b) Prepare the journal entry for the issuance when only the market price of the common stock is known and it is $212 per share. (Round answers to 0 decimal places, e.g. $1,225. 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.) No. Account Titles and Explanation Debit Credit (a) enter an account title for case A enter a debit amount enter a credit amount enter an account title for case A enter a debit amount enter a credit amount enter an account title for case A enter a debit amount enter a credit amount enter an account title for case A enter a debit amount enter a credit amount enter an account title for case A enter a debit amount enter a credit amount (b) enter an account title for case B enter a debit amount enter a credit amount enter an account title for case B enter a debit amount enter a credit amount enter an account title for case B enter a debit amount enter a credit amount enter an account title for case B enter a debit amount enter a credit amount enter an account title for case B enter a debit amount enter a credit amount eTextbook and Media

Answer 1

a)
Account Titles	Debit	Credit
Cash	$                   121,000.00
Preferred Stock (100 shares x $100)		$      10,000.00
Paid-in Capital in Excess of Par-Preferred		$      14,200.00
Common Stock (500 shares x $10)		$        5,000.00
Paid-in Capital in Excess of Par-Common		$      91,800.00
	# of Shares	Market Price	Amount	Percent
Common stock	500	$           164.00	$                   82,000.00	80%
Preferred stock	100	$           205.00	$                   20,500.00	20%
Fair Market Value			$                 102,500.00	100%
Allocation	Common stock	Preferred stock
Issue price	$                   121,000.00	$    121,000.00
Allocation %	80%	20%
Total	$                     96,800.00	$      24,200.00
Par Value = # of Shares x Par Value	$                       5,000.00	$      10,000.00
Paid in capital in excess of Par	$                     91,800.00	$      14,200.00
b)
Account Titles	Debit	Credit
Cash	$                   121,000.00
Preferred Stock (100 shares x $100)		$      10,000.00
Paid-in Capital in Excess of Par-Preferred		$        5,000.00
Common Stock (500 shares x $10)		$        5,000.00
Paid-in Capital in Excess of Par-Common		$    101,000.00
	# of Shares	Market Price	Amount
Common stock	500	$           212.00	$                 106,000.00
Preferred stock	100		$                                -
Fair Market Value			$                 106,000.00
Allocation	Common stock	Preferred stock
Issue price	$                   106,000.00	$    121,000.00
Common		$   (106,000.00)
Total	$                   106,000.00	$      15,000.00
Par Value = # of Shares x Par Value	$                       5,000.00	$      10,000.00
Paid in capital in excess of Par	$                   101,000.00	$        5,000.00