Coronado Corporation is a regional company which is an SEC registrant. The corporation's securities are thinly traded on NASDAQ. Coronado Corp., has issued 16,000 units. Each unit consists of a $1,104 par value, 12% subordinated debenture and 16 shares of $8 par common stock. The units were sold to outside investors for cash at $1,408 per unit. Prior to this sale, the 2-week ask price of common stock was $46 per share. Twelve percent is a reasonable market yield for the debentures, and therefore the par value of the bonds is equal to the fair value. (a) Prepare the journal entry to record Coronado's transaction, under the following conditions. (List all debit entries before credit entries. Do not round intermediate calculations. Round final answers to 0 decimal places, e.g. 38,487. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) 1. Employing the incremental method. 2. Employing the proportional method, assuming the recent price quote on the common stock reflects fair value. No. Account Titles and Explanation 1. Cash Bonds Payable Common Stock Debit Credit

Coronado Corporation is a regional company which is an SEC registrant. The corporation's securities are thinly traded on NASDAQ. Coronado Corp., has issued 16,000 units. Each unit consists of a $1,104 par value, 12% subordinated debenture and 16 shares of $8 par common stock. The units were sold to outside investors for cash at $1,408 per unit. Prior to this sale, the 2-week ask price of common stock was $46 per share. Twelve percent is a reasonable market yield for the debentures, and therefore the par value of the bonds is equal to the fair value. (a) Prepare the journal entry to record Coronado's transaction, under the following conditions. (List all debit entries before credit entries. Do not round intermediate calculations. Round final answers to 0 decimal places, e.g. 38,487. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) 1. Employing the incremental method. 2. Employing the proportional method, assuming the recent price quote on the common stock reflects fair value. No. Account Titles and Explanation 1. Cash Bonds Payable Common Stock Debit Credit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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