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Lelechka [254]
3 years ago
5

On January 1, year 8, Crimson Corp., a closely held corporation, issued 5% bonds with a maturity value of $90,000, together with

1,500 shares of its $3 par value common stock, for a combined cash amount of $121,800. The market value of Crimson’s stock is uncertain. If the bonds had been issued separately they would have sold at 102. What amount should Crimson report for additional paid-in capital (or paid-in capital—excess of par) upon issuing the stock?
Business
1 answer:
Elina [12.6K]3 years ago
6 0

Answer:

The amount Crimson should report for additional paid-in capital (or paid-in capital—excess of par) upon issuing the stock is $25,500.

Explanation:

Additional paid-in capital is the excess of market value of common stock over the face value of common stock. Therefore, the amount Crimson should report for additional paid-in capital can be calculated as follows:

Face value of common stock = Number of shares issued * Price per share = $1,500 * $3 = $4,500

Since if the bonds had been issued separately they would have sold at 102, this implies that the market value of the bonds is 102% of the face value of the bond. Therefore, we have:

Bonds market value = Bonds face value * 102% = $90,000 * 102% = $91,800

Market value of common stock = Combined cash amount - Bonds market value = $121,800 - $91,800 = $30,000

Therefore, we have:

Additional paid-in capital = Market value of common stock - Face value of common stock = $30,000 - $4,500 = $25,500

Therefore, the amount Crimson should report for additional paid-in capital (or paid-in capital—excess of par) upon issuing the stock is $25,500.

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Answer: 18,000

Explanation:

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Insurance\ expense\ per\ month=\frac{Prepaid\ Insurance\ for\ liability\ policy}{Period\ of\ policy}

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= 36,000 - 24,000

= 12,000

Crop damage policy:

Insurance\ expense\ per\ month=\frac{Prepaid\ Insurance\ for\ crop\ damage\ policy}{Period\ of\ policy}

Insurance\ expense\ per\ month=\frac{12,000}{24}

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= No. of months from 1 Jan 2018 to 31 Dec 2018 × Insurance expense per month

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Prepaid insurance balance for crop damage policy on 31 Dec, 2018:

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= 6,000

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Total prepaid insurance balance on 31 Dec 2018:

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Answer:

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Explanation:

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Cr. Bank with $4,510

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Dr. Supplies Expense with $740

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Cr. Sales commission with $20,500

(Being Sales Commission received)

Dr. Automobile Expense with $1,250

Dr. Miscellaneous Expense with $840

Cr. Bank with $2,090

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Cr. Bank with $2,620

(Being Payment for Office Salaries)

Dr Dividend with $1,210

Cr Bank with $1,210

(Being payment of Dividend)

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