Parker Corporation has issued 2,400 shares of common stock and 480 shares of pre
ID: 2554741 • Letter: P
Question
Parker Corporation has issued 2,400 shares of common stock and 480 shares of preferred stock for a lump sum of $90,000 cash. Give the entry for the issuance assuming the par value of the common stock was $5 and the fair value $30, and the par value of the preferred stock was $40 and the fair value $50. (Each valuation is on a per share basis and there are ready markets for each stock.) (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.) Account Titles and Explanation Debit Credit Cash 90000 Common Stock 12000 Paid-in Capital in Excess of Par- Common Stock Preferred Stock Paid-in Capital in Excess of Par - Preferred StockExplanation / Answer
a Total fair value common stock 72000 =2400*30 Total fair value preferred stock 24000 =480*50 Total fair value 96000 Allocation: Common stock 67500 =90000/96000*72000 Preferred stock 22500 =90000/96000*24000 Cash 90000 Common Stock 12000 =2400*5 Paid-in Capital in Excess of Par—Common Stock 55500 =67500-12000 Preferred Stock 19200 =480*40 Paid-in Capital in Excess of Par—Preferred stock 3300 =22500-19200 b Cash 90000 Common Stock 12000 =2400*5 Paid-in Capital in Excess of Par—Common Stock 50400 =2400*(26-5) Preferred Stock 19200 =480*40 Paid-in Capital in Excess of Par—Preferred stock 8400