Common stock: Common stock represents equity ownership in a corporation. Common stockholders bear a higher amount of risk of loss and are also entitled to higher benefits in the company’s profits and assets. Stocks can be issued at par or at premium or discount. Shares can be issued not only for cash but also in exchange of another asset example land. Shares can also be issued for a lump sum amount and not per share basis. Such lump sum amount is then allocated to the common and preferred stocks. Bonds issued by the company can be issued with an option to convert it into shares. To prepare: To prepare journal entries for the issue of shares. Given information: Bonds issued: $10,000. Preferred stock price: $106 per share. Common stock for equipment: 500. Appraised value: $7,100; book value: $6,200. Lump sum amount: $10,800. Common shares: 200. Preferred: 50. Fair value: $6,500.

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Chapter 15, Problem 4P

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Common stock: Common stock represents equity ownership in a corporation. Common stockholders bear a higher amount of risk of loss and are also entitled to higher benefits in the company’s profits and assets. Stocks can be issued at par or at premium or discount. Shares can be issued not only for cash but also in exchange of another asset example land.

Shares can also be issued for a lump sum amount and not per share basis. Such lump sum amount is then allocated to the common and preferred stocks.

Bonds issued by the company can be issued with an option to convert it into shares.

To prepare: To prepare journal entries for the issue of shares.

Given information: Bonds issued: $10,000.

Preferred stock price: $106 per share.

Common stock for equipment: 500.

Appraised value: $7,100; book value: $6,200.

Lump sum amount: $10,800.

Common shares: 200.

Preferred: 50.

Fair value: $6,500.

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