Answer:
See explanation section
Explanation:
Requirement A
Debit Cash $194,600
Credit Common stock - Par value $ 22,500
Credit Common stock - Additional paid-in-capital $172,100
Calculation:
Cash: 4,500 shares × $45 = $202,500
As the company's par value is $5,
Common stock - Par value: 4,500 shares × $5 = $22,500
As the market value of the stock is $45, the additional stock value = $45 - $5 = $40. Moreover, the company has issuance cost of $7,900
Additional common stock apart from par value minus the issuance cost = ($4,500 shares × $40) - $7,900 = $180,000 - $7,900 = $172,100.
The company issue common stock with a market value of $45 and issuance cost of $7,900 in exchange of cash.
Requirement B
Debit Land $50,600
Credit Common stock - Par value $ 5,500
Credit Common stock - Additional paid-in-capital $45,100
Calculation:
Land: 1,100 shares × $46 = $50,600
As the company's par value is $5,
Common stock - Par value: 1,100 shares × $5 = $5,500
As the market value of the stock is $46, the additional stock value = $46 - $5 = $41.
Additional common stock apart from par value = ($1,100 shares × $41) = $45,100.
Although the land is appraised for $49,000, due to the increased market price stock, it is valued more.
The company issue common stock with a market value of $46 in exchange for land.
Requirement C
Debit Treasury Stock $19,270
Credit Cash $19,270
Purchasing share from the stock market is known as treasury stock.
Calculation: Treasury stock = 470 shares × $41 = $19,270
Debit Cash $17,860
Credit Common Stock - par value $2,350
Credit Common stock - Additional paid-in-capital $15,510
Calculation:
As the company's par value is $5,
Common stock - Par value: 470 shares × $5 = $2,350
Additional common stock apart from par value = $470 shares × ($38 - $5) = $15,510.
The company issue common stock with a market value of $38 after purchasing those treasury stock at $41 per share.
