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Funs Inc. issues 25,000 shares of $1 par value common stock and 25 shares of $1,000 par value, 6% preferred stock to a private investor for $ 1,820, 000. The fair value of the common stock is $71 per share and the fair value of the preferred stock is $1,440 per share. Prepare the journal entry to record the transaction assuming that the fair market values (FMV) for both the common and preferred stock are known. Prepare the journal entry assuming that only the FMV of the common stock is known.

Funs Inc. issues 25,000 shares of $1 par value common stock and 25 shares of $1,000 par value, 6% preferred stock to a private investor for $ 1,820, 000. The fair value of the common stock is $71 per share and the fair value of the preferred stock is $1,440 per share. Prepare the journal entry to record the transaction assuming that the fair market values (FMV) for both the common and preferred stock are known. Prepare the journal entry assuming that only the FMV of the common stock is known.

FINANCIAL ACCOUNTING
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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Funs Inc. issues 25,000 shares of $1 par value common stock and 25 shares of $1,000 par value, 6% preferred stock to a private investor for $ 1,820,000. The fair value of the common stock is $71 per share and the fair value of the preferred stock is $1,440 per share. Prepare the journal entry to record the transaction assuming that the fair market values (FMV) for both the common and preferred stock are known. Prepare the journal entry assuming that only the FMV of the common stock is known.
Transcribed Image Text:Funs Inc. issues 25,000 shares of $1 par value common stock and 25 shares of $1,000 par value, 6% preferred stock to a private investor for $ 1,820,000. The fair value of the common stock is $71 per share and the fair value of the preferred stock is $1,440 per share. Prepare the journal entry to record the transaction assuming that the fair market values (FMV) for both the common and preferred stock are known. Prepare the journal entry assuming that only the FMV of the common stock is known.
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