Problem 154 Pronghorn Corporations charter authorized issuan

Problem 15-4 Pronghorn Corporation\'s charter authorized issuance of 103,000 shares of $10 par value common stock and 47,400 shares of $50 preferred stock. The following transactions involving the issuance of shares of stock were completed. Each transaction is independent of the others. 1. Issued a S9.200, 9% bond payable at par and gave as a bonus one share of preferred stock, which at that time was selling for $105 a share 2. Issued 540 shares of common stock for equipment. The equipment had been appraised at $6,800; the seller\'s book value was $6,600. The most recent market price of the common stock is $16 a share 3. Issued 363 shares of common and 110 shares of preferred for a lump sum amounting to $9,700. The common had been selling at $14 and the preferred at $61 4. Issued 190 shares of common and 46 shares of preferred for equipment. The common had a fair value of $16 per share; the equipment has a fair value of $6,200. Record the transactions listed above in journal entry form. (Round Round intermediate calculations to 6 decimal places, e.g. 0.546872 and final 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 O for the amounts.) No. Account Titles and Explanation 1. Debit Credit 2. 3.

Solution

No.

Account titles and explanation

debit

Credit

1.

Cash

9200

Discount on bonds payable

105

Bonds payable

9200

Preferred stock

50

Preferred Stock (Excess of Par Paid-In Capital) (balancing figure)

55

2.

Equipment (540*16)

8640

Common Stock (540*10)

5400

Common Stock (Excess of Par Paid-In Capital) (540*6)

3240

3.

Cash

9700

Preferred stock

5500

Preferred Stock (Excess of Par Paid-In Capital)

20

Common Stock

3630

Common Stock (Excess of Par Paid-In Capital)

550

4.

Equipment

6200

Preferred stock

860

Preferred Stock (Excess of Par Paid-In Capital)

2300

Common Stock

1900

Common Stock (Excess of Par Paid-In Capital)

1140

Explanation for 3

FMV

Allocation

par

APIC

Common stock

5082(363*14)

4180 (9700*(5082/(5082+6710)))

3630(363*10)

550 (4180-3630)

Preferred stock

6710(110*61)

5520(9700*(6710/(5082+6710)))

5500 (110*50)

20 (5520-5500)

Explanation for 4

Allocation of FMV for common stock = 190*16 = 3040

Par common stock = 190*10 = 1900

APIC common stock = 190*6 = 1140

Allocation of FMV for preferred stock = 6200-3040 = 3160

Par preferred stock = 46*50 = 2300

APIC preferred stock = 3160-2300 = 860

No.	Account titles and explanation	debit	Credit
1.	Cash	9200
	Discount on bonds payable	105
	Bonds payable		9200
	Preferred stock		50
	Preferred Stock (Excess of Par Paid-In Capital) (balancing figure)		55
2.	Equipment (540*16)	8640
	Common Stock (540*10)		5400
	Common Stock (Excess of Par Paid-In Capital) (540*6)		3240
3.	Cash	9700
	Preferred stock		5500
	Preferred Stock (Excess of Par Paid-In Capital)		20
	Common Stock		3630
	Common Stock (Excess of Par Paid-In Capital)		550
4.	Equipment	6200
	Preferred stock		860
	Preferred Stock (Excess of Par Paid-In Capital)		2300
	Common Stock		1900
	Common Stock (Excess of Par Paid-In Capital)		1140