Problem #6 Issuance of Ordinary and Preference Shares Calamba Corporation was organized on April 8, 2018. The corporation was authorized to issue 9,000 shares of 9% cumulative preference shares, P100 par value, and 90,000 shares of ordinary shares, P35 par value. Record in a general journal the following transactions completed during the firm's first year of operations: Apr. 8 Sold 32,000 shares of ordinary shares at par for cash. 8 Issued 900 shares of ordinary shares to a lawyer in exchange for legal services pertaining to incorporation. The stock is selling at par. May 7 Sold 5,000 shares of preferred stock at P109; received cash. Aug. 12 Issued 30,000 shares of ordinary shares in exchange for land with a fair market value of P1,050,000.

Problem #6 Issuance of Ordinary and Preference Shares Calamba Corporation was organized on April 8, 2018. The corporation was authorized to issue 9,000 shares of 9% cumulative preference shares, P100 par value, and 90,000 shares of ordinary shares, P35 par value. Record in a general journal the following transactions completed during the firm's first year of operations: Apr. 8 Sold 32,000 shares of ordinary shares at par for cash. 8 Issued 900 shares of ordinary shares to a lawyer in exchange for legal services pertaining to incorporation. The stock is selling at par. May 7 Sold 5,000 shares of preferred stock at P109; received cash. Aug. 12 Issued 30,000 shares of ordinary shares in exchange for land with a fair market value of P1,050,000.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter10: Stockholder's Equity

Section: Chapter Questions

Problem 8MCQ

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Issuances of Stock Cada Corporation is authorized to issue 10,000 shares of 100 par, convertible, callable preferred stock and 80,000 shares of no-par, no-stated value common stock. There are currently 7,000 shares of preferred and 30,000 shares of common stock outstanding. The following are several alternative transactions: 1. Purchased land by issuing 640 shares of preferred stock and 1,000 shares of common stock. Preferred and common are currently selling at 113 and 36 per share, respectively, No reliable appraisal of the land is available. 2. Same as Transaction 1, except that land is appraised at 104,000, and the preferred stock has no current market value. 3. Issued, for 99,000 cash, a combination of 400 shares of preferred stock and bonds payable with a face value of 50,000. Currently, the preferred stock is selling for 120 per share and the bonds at 104. 4. Same as Transaction 3, except that the bonds do not have a current market value. 5. Same as Transaction 3, except that the preferred stock does not have a current market value. 6. Preferred shareholders (who had originally paid the corporation 110 per share for their stock) convert 6,500 preferred shares into 19,500 shares of common stock. The current market prices of the preferred stock and the common stock are 120 and 41 per share, respectively. 7. The corporation calls the 7,000 shares of preferred stock (originally issued at 110 per share) at 123 per share. Common stock is currently selling for 42 per share. Shareholders elect not to convert into common stock. 8. Same as Transaction 7, except that shareholders owning 2,000 shares of preferred stock elect to convert each share into 3 shares of common stock The remaining 5,000 preferred shares are retired. Required: Next Level Prepare the journal entry necessary to record each transaction. Below each entry, explain your reason for the values used.
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