Exercise 15B-5 Your answer is partially correct. Try again. Metlock Inc. issues

Question

Exercise 15B-5 Your answer is partially correct. Try again. Metlock Inc. issues 500 shares of $10 par value common stock and 100 shares of $100 par value preferred stock for a lump sum of $108,000 (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 (b) Prepare the journal entry for the issuance when only the market price of the common stock is known and it is $186 per share. (Round answers to O decimal places, e.g. $1,225. Credit account titles are automatically indented when amount is entered. Do $205 each not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Explanation / Answer

b)

Fair market value of common stock (500*$164) $    82,000 Fair market value of preferred stock (100*$205) $    20,500 $ 102,500 Allocated to Common stock ($108,000/$102,500*$82,000) $    86,400 Allocated to Preferred stock ($108,000/$102,500*$20,500) $    21,600

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