Problem 15-4 Pronghorn Corporation\'s charter authorized issuance of 103,000 sha
ID: 2608896 • Letter: P
Question
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.Explanation / Answer
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