Answer:
Option (c) $141,818
Explanation:
Data provided in the question:
Number of common stocks issued = 5,000
Value of common stock = $25 par value
Number of preferred stocks issued = 7,500
Value of preferred stock = $20 par value
Lump sum value of total shares issued = $260,000
Now,
Fair value of the preferred stocks = 7,500 × $20
= $150,000
Fair value of the common stocks = 5,000 × $25
= $125,000
Thus,
Total value of the stocks issued = $150,000 + $125,000
= $275,000
Therefore,
Proceeds allocated to the preferred stock
= Lump sum value × [ Fair value of the preferred stocks ÷ value of the stocks ]
= $260,000 × [ $150,000 ÷ $275,000 ]
= $141,818.18 ≈ $141,818
Hence,
Option (c) $141,818
