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Svetllana [295]
3 years ago
15

Dave Matthew Inc. issues 500 shares of $10 par value common stock and 100 shares of $100 par value preferred stock for a lump su

m of $100,000. What portion of the proceeds is allocated to the 500 shares of common stock in this transaction if the market price of the common shares is $165 each and the market price of the preferred shares is $230 each?
Business
1 answer:
Sedaia [141]3 years ago
3 0

Answer:

$78,199

Explanation:

If the market price of common stock is $165 per stock, then selling 500 common stocks should = $82,500

If the market price of preferred stock is $230 per preferred stock, then selling 100 preferred stocks should = $23,000

If we add both we would get $105,500. If we want to allocate the proceeds proportionally according to their market prices:

common stocks = ($82,500 / $105,500) x $100,000 = $78,199

preferred stocks = ($23,000 / $105,500) x $100,000 = $21,801

the journal entries should be:

  • Dr Cash account 78,199
  • Cr Common Stock account 5,000
  • Cr Capital Paid-in Excess of Par Value (Common Stock) account 73,199

  • Dr Cash account 21,801
  • Cr Common Stock account 10,000
  • Cr Capital Paid-in Excess of Par Value (Preferred Stock) account 11,801

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Answer:

$76,260

Explanation:

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3 years ago
A customer sells your company a defective part. The part is put into your product, rendering it defective. What will most likely
Lostsunrise [7]

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