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Chapter 15 Quiz Solutions

# Chapter 15 Quiz Solutions - share On they reacquired 200...

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Name: ___________________________________________ ACCT 304 - Fall 2009 – Chapter 15 Quiz Instructions: Please show all work. Please write your answer CLEARLY. 1. (4 points) Parker Corporation issued 2,000 shares of common stock and 400 shares of preferred stock for a lump sum of \$72,000 cash. The par value of the common stock was \$5 and the market value was \$30. The par value of the preferred stock was \$40 and the market value was \$50. Give the correct entry to record the issuance of this lump sum sale. Common Stock: 2000 shares x \$30 = \$60,000 6/8 x \$72,000 = \$54,000 allocated to CS Preferred Stock: 400 shares x \$50 = \$20,000 2/8 x \$72,000 = \$18,000 allocated to PS Total Market Value: \$80,000 Dr. Cash \$72,000 Cr. Common Stock @ par (2000 x \$5) \$10,000 Cr. Additional PIC – CS (\$54,000-\$10,000) \$44,000 Cr. Preferred Stock @ par (400 x \$40) \$16,000 Cr. Additional PIC – CS (\$18,000-\$16,000) \$2,000 2. (4 points) On January 1, 2009, Lane Company issued 1,000 shares of \$1 par common stock for \$20 per
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Unformatted text preview: share. On May 15, 2009, they reacquired 200 shares of this common stock for \$25 per share. Prepare the journal entries for each of these transactions: January 1, 2009: Dr. Cash (1000 x \$20) \$20,000 Cr. Common Stock @ par (1000 x \$1) \$1,000 Cr. Additional PIC – CS (\$20,000-\$1,000) \$19,000 May 15, 2009: Dr. Treasury Stock (200 x \$25) \$5,000 Cr. Cash \$5,000 3. (2 points) A corporation was organized in January 2007 with authorized capital of \$10 par value common stock. On March 1, 2010, the corporation's attorney accepted 7,000 shares of common stock in settlement for legal services that had been performed with a fair value of \$90,000. Prepare the correct journal entry. Dr. Organization (or Legal) Expense \$90,000 Cr. Common Stock @ par (7000 x \$10) \$70,000 Cr. Additional PIC – CS (\$90,000-\$70,000) \$20,000...
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