On May 1, 2018, Carlton Inc. issued 5,000 shares of common stock and 2000 shares of...

On May 1, 2018, Carlton Inc. issued 5,000 shares of common stock and 2000 shares of preferred stock for a lump sum of $330,000. The par value of the common stock was $.50 per share and the market value $27.20 per share. The par value of the preferred stock was $50 per share and the market value $102 per share. Prepare the necessary journal entry to record stock issuance.

Expert Solution

Journal entries
S.no.	Accounts title and explanations		Debit $	Credit $
a.	Cash account			3,30,000
	Common Stock capital (5000*0.50)		2500
	Preferred stock capital (2000*50)		1,00,000
	Paid in capital in excess of par-Common		129500	(132000-2500)
	Paid in capital in excess of par-Prefrred		98000	(198000-100000)
	(for issuance of stock)


Note: Allocation of consideration based on Market price:
Stock	Number	Market price	Total MV	% Of total	Consideration	Allocated
Comon	5000	27.2	136000	40%	330000	132000
Preferred	2000	102	204000	60%	330000	198000
			340000			330000

ekkarill92 answered 2 years ago

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