Chapter 15 – Homework Week 4

E15-2 Recording the Issuance of Common and Preferred Stock –
Kathleen Battle Corp.

Journal entries to record given transaction are listed below:

1/10 Cash (80,000 x $5) $400,000 Common Stock (80,000 x $1) $ 80,000 Paid-in Capital in Excess of Stated Value –
Common Stock (80,000 x $4) $320,000

3/01 Cash (5,000 x $108) $540,000 Preferred Stock (5,000 x $100) $500,000 Paid-in Capital in Excess of Par Value – Preferred Stock (5,000 x $8) $ 40,000

4/01 Land $ 80,000 Common Stock (24,000 x $1) $ 24,000 Paid-in Capital in Excess of Stated Value – Common Stock ($80,000 - $24,000) $ 64,000

5/01 Cash ($80,000 x $7) $560,000 Common Stock (80,000 x $1) $ 80,000 Paid-in Capital in Excess of Stated Value – Common Stock (80,000 x $6) $480,000

8/01 Organized Expense $ 50,000 Common Stock (10,000 x $1) $ 10,000 Paid-in Capital in Excess of Stated Value – Common Stock ($50,000 - $10,000) $ 40,000

9/01 Cash (10,000 x $9) $ 90,000 Common Stock (10,000 x $1) $ 10,000 Paid-in Capital in Excess of Stated Value – Common Stock (10,000 x $8) $ 80,000

11/1 Cash (1,000 x $112) $112,000 Preferred Stock (1,000 x $100) $100,000 Paid-in Capital in Excess of Par Value – Preferred Stock (1,000 x $12) $ 12,000

E15-5 Lump Sum Sales of Stock with Preferred Stock – Dave Matthews Inc.

(a) Fair Market Value of Common Stock (500 x $165) $ 82,500
Fair Market Value of Preferred Stock (100 x $230) $ 23,000 $105,500 Allocated to Common Stock $ 78,199 ($82,500 / $105,500 x $100,000) Allocated to Preferred Stock $ 21,801 ($23,000 / $105,500 x $100,000) Total Allocation $100,000
Journal entry:
Cash $100,000 Common Stock (500 X $10) $ 5,000
Paid-in