Chapter 18 Spiceland 6th edition

Chapter 18 Spiceland 6th edition - Exercise 18-5 February...

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Exercise 18-5 February 12 Cash (2 million shares x $9 per share). ............................... 18,000,000 Common stock (2 million shares x $1 par). ................... 2,000,000 Paid-in capital – excess of par (difference). .................. 16,000,000 February 13 Legal expenses (40,000 shares x $9 per share). .................. 360,000 Common stock (40,000 shares x $1 par). ...................... 40,000 Paid-in capital – excess of par (difference). .................. 320,000 Note: Because 2 million shares sold the previous day for $9 per share, it’s reasonable to assume a $9 per share fair value. February 13 Cash. ............................................................................. 945,000 Common stock (80,000 shares x $1 par) . ..................... 80,000 Paid-in capital – excess of par, common * ................ 640,000 Preferred stock (4,000 shares x $50 par). ...................... 200,000 Paid-in capital – excess of par, preferred ** ............. 25,000 * 80,000 shares x [$9 market value - $1 par] ** Since the value of the common shares is known ($720,000), the market value of the preferred ($225,000) is assumed from the total selling price ($945,000). November 15
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Property, plant, and equipment (cash value). .................. 3,688,000 Common stock (380,000 shares at $1 par per share) ....... 380,000 Paid-in capital – excess of par (difference). ................ 3,308,000
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Exercise 18-10 Preferred Common 2011 $ 8 million $ 0 2012 20 million * 0 2013 20 million ** 130 million (remainder) * $8 million dividends in arrears plus $12 million of the $16 million current preference. ** $4 million dividends in arrears plus the $16 million current preference. Exercise 18-13 1. January 23, 2011 ($ in millions) Treasury stock (10 million shares x $20). .................................... 200 Cash. ................................................................................... 200 2. September 3, 2011 Cash (1 million shares x $21). ..................................................... 21
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Chapter 18 Spiceland 6th edition - Exercise 18-5 February...

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