Manning Corp issued 600 shares of $4 par value common stock and 200 shares of $2
ID: 2566002 • Letter: M
Question
Manning Corp issued 600 shares of $4 par value common stock and 200 shares of $20 par value preferred stock for a lump sum of $25,000, when the market value of the common shares is $30 each and the market value of the preferred shares is $50 each.
a. Give the journal entry for Manning Corp for the issuance of the shares assuming the market value of the common shares and the market value of the preferred shares are both known. Assume no issue costs.
b. Give the journal entry for Manning Corpp for the issuance of the shares assuming the market value of the common shares is known, but the market value of the preferred shares is unknown. Assume no issue costs.
c. Give the journal entry for Manning Corp for the issuance of the shares assuming the market value of the common shares and the market value of the preferred shares are both known. Assume issue costs of $4,000.
Explanation / Answer
Manning Corp issued 600 shares of $4 par value common stock and 200 shares of $20 par value preferred stock for a lump sum of $25,000, when the market value of the common shares is $30 each and the market value of the preferred shares is $50 each.
a. Give the journal entry for Manning Corp for the issuance of the shares assuming the market value of the common shares and the market value of the preferred shares are both known. Assume no issue costs.
Answer: Apportionment Method
Common Stock
Cash (600*30)/(600*30+200*50)*25000 (Dr.) $16,071
Common Stock (Cr.) $2,400
Paid-In Capital in Excess of Stated Value—Common (Cr.) $13,671
Preffered Stock
Cash (200*50)/(600*30+200*50)*25000 (Dr.) $8,929
Preffered Stock (Cr.) $4,000
Paid-In Capital in Excess of Stated Value—Preferred(Cr.) $4,929
b. Give the journal entry for Manning Corpp for the issuance of the shares assuming the market value of the common shares is known, but the market value of the preferred shares is unknown. Assume no issue costs.
Common Stock
Cash (600*30) (Dr.) $18,000
Common Stock (Cr.) $2,400
Paid-In Capital in Excess of Stated Value—Common (Cr.) $15,600
Preffered Stock
Cash (200*50)/(600*30+200*50)*25000 (Dr.) $7,000
Preffered Stock (Cr.) $4,000
Paid-In Capital in Excess of Stated Value—Preferred(Cr.) $3,000
c. Give the journal entry for Manning Corp for the issuance of the shares assuming the market value of the common shares and the market value of the preferred shares are both known. Assume issue costs of $4,000.
Common Stock
Cash (600*30)/(600*30+200*50)*25000 (Dr.) $16,071
Common Stock (Cr.) $2,400
Paid-In Capital in Excess of Stated Value—Common (Cr.) $13,671
Preffered Stock
Cash (200*50)/(600*30+200*50)*25000 (Dr.) $8,929
Preffered Stock (Cr.) $4,000
Paid-In Capital in Excess of Stated Value—Preferred(Cr.) $4,929
Preffered Stock
Intangible/Preliminary Expenses (Dr) $4,000
Cash (Cr.) $4,000
Manning Corp issued 600 shares of $4 par value common stock and 200 shares of $20 par value preferred stock for a lump sum of $25,000, when the market value of the common shares is $30 each and the market value of the preferred shares is $50 each.
a. Give the journal entry for Manning Corp for the issuance of the shares assuming the market value of the common shares and the market value of the preferred shares are both known. Assume no issue costs.
Answer: Apportionment Method
Common Stock
Cash (600*30)/(600*30+200*50)*25000 (Dr.) $16,071
Common Stock (Cr.) $2,400
Paid-In Capital in Excess of Stated Value—Common (Cr.) $13,671
Preffered Stock
Cash (200*50)/(600*30+200*50)*25000 (Dr.) $8,929
Preffered Stock (Cr.) $4,000
Paid-In Capital in Excess of Stated Value—Preferred(Cr.) $4,929
b. Give the journal entry for Manning Corpp for the issuance of the shares assuming the market value of the common shares is known, but the market value of the preferred shares is unknown. Assume no issue costs.
Common Stock
Cash (600*30) (Dr.) $18,000
Common Stock (Cr.) $2,400
Paid-In Capital in Excess of Stated Value—Common (Cr.) $15,600
Preffered Stock
Cash (200*50)/(600*30+200*50)*25000 (Dr.) $7,000
Preffered Stock (Cr.) $4,000
Paid-In Capital in Excess of Stated Value—Preferred(Cr.) $3,000
c. Give the journal entry for Manning Corp for the issuance of the shares assuming the market value of the common shares and the market value of the preferred shares are both known. Assume issue costs of $4,000.
Common Stock
Cash (600*30)/(600*30+200*50)*25000 (Dr.) $16,071
Common Stock (Cr.) $2,400
Paid-In Capital in Excess of Stated Value—Common (Cr.) $13,671
Preffered Stock
Cash (200*50)/(600*30+200*50)*25000 (Dr.) $8,929
Preffered Stock (Cr.) $4,000
Paid-In Capital in Excess of Stated Value—Preferred(Cr.) $4,929
Preffered Stock
Intangible/Preliminary Expenses (Dr) $4,000
Cash (Cr.) $4,000
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