=+SA 13-3 Issuing stock Chapter 13 Corporations: Organization, Stock Transactions, and Dividends 613 In preparing financial statements
Question:
=+SA 13-3 Issuing stock Chapter 13 Corporations: Organization, Stock Transactions, and Dividends 613 In preparing financial statements for 2010, Rafel Baltis and Emma Cavins, the controller for Biosciences Unlimited Inc., have the following conversation:
Emma: Rafel, I’ve got a problem.
Rafel: What’s that, Emma?
Emma: Issuing common stock to raise that additional $10 million was a great idea. But . . .
Rafel: But what?
Emma: I’ve got to prepare the 2010 annual financial statements, and I am not sure how to classify the common stock.
Rafel: What do you mean? It’s common stock.
Emma: I’m not so sure. I called the auditor and explained how we are contractually obligated to pay the new stockholders 2% of net sales until $50 per share is paid. Then, we may be obligated to pay them
$100 per share.
Rafel: So . . .
Step by Step Answer: