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Sav [38]
3 years ago
9

Sheridan Company issues 3600 shares of its $10 par value common stock having a fair value of $20 per share and 5600 shares of it

s $10 par value preferred stock having a fair value of $20 per share for a lump sum of $205400. What amount of the proceeds should be allocated to the preferred stock
Business
1 answer:
Svetach [21]3 years ago
8 0

Answer:

$125,026

Explanation:

Common Shares                                      3,600

Fair value                                                 <u>  $20</u>

Total market value of common stock    $72,000

Preferred shares                                        5,600

Fair value                                                   <u> $20</u>

Total market value of preferred stock     $112,000

Lump Sum amount                                    $205,400

Amount of proceeds should be allocated to the preferred stock = 205,400 * (112,000 / (72,000 + 112,000) ) = $125,026

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