Seles Corporation’s charter authorized issuance of 108,000 shares of $10 par val

Question

Seles Corporation’s charter authorized issuance of 108,000 shares of $10 par value common stock and 56,000 shares of $50 preferred stock. The following transactions involving the issuance of shares of stock were completed. Each transaction is independent of the others.

Record the transactions listed above in journal entry form. (Round answers to 0 decimal places, e.g. $38,487. 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

1. Issued a $13,400, 9% bond payable at par and gave as a bonus one share of preferred stock, which at that time was selling for $106 a share. 2. Issued 650 shares of common stock for equipment. The equipment had been appraised at $7,680; the seller’s book value was $6,890. The most recent market price of the common stock is $16 a share. 3. Issued 415 shares of common and 75 shares of preferred for a lump sum amounting to $11,520. The common had been selling at $14 and the preferred at $67. 4. Issued 175 shares of common and 49 shares of preferred for equipment. The common had a fair value of $16 per share; the equipment has a fair value of $6,750.

Explanation / Answer

Journal entries

1)

2)

3)

Fair market value of common stokc 415 *14                       = 5,810

Fair market value of preferred stock 75 *67                       = 5,025

Total                                                                                       =$10,835

Allocated to common stock 5,810 *11835/10835            = $6346

Allocated to preferred stock 5025/10835*11,835            = $5,489

Allocated                                                                           = $11,835

4)

Value of Equipment                                                               $6,750

Less:Market value of common stock(175*16)                      2,800

total value assigne to preferred stock                                  $3,950

Cash $13,400 Discount on bonds payable        106 To Bonds payable $13,000 To Preferred Stock          50 To Paid in excess of par         56

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