ACCT $3230-$ Spring $2024$

Chapter $20-$ Stockholders' Equity Handout #$2$

Alpha Company issued $2,000$ shares of $$1$ par common stock and $600$ shares of $$25$ par preferred stock in exchange for $$50,000.$ Each common share has a fair value of $$12,$ and each preferred share has a fair value of $$40.$

a$.$ Prepare the joumal entry for the stock issuance.

b$.$ Repeat part A assuming the fair value of the common stock is not known.

Bravo Company began $2021$ as a private company. The following events occurred in $2021$ :

$1/1/21$: Issued $10,000$ no$-$par common shares in an initial public offering $($IPO$)$ for $$7$ per share.

$3/1/21$: Acquired $500$ Company B shares for $$10$ per share to be held in treasury.

$5/1/21$: Reissued $100$ treasury shares to the public for $$11$ per share.

$7/1/21$: Reissued $200$ treasury shares to the public for $$8$ per share.

$9/1/21$: Reissued $100$ treasury shares to the public for $$12$ per share.

$10/1/21$: Retired the remaining $100$ treasury shares.

$11/1/21$: Acquired $100$ Company B shares for $$15$ per share and retired them directly.

$12/1/21$: Issued $500$ shares in exchange for equipment with a fair value of $$8,000.$ The fair value of the stock was $$14$ per share. Assume fair value of the stock is more reliable.

Required: Prepare journal entries for each event in $2021$ for Bravo Company.

$1/1/21$: Common stock issuance as part of an initial public offering $($IPO$)$

$3/1/21$: Purchased $500$ shares to be held in treasury account @$$10$ per share

$5/1/21$: Resold $100$ treasury shares@$$11$ per share

$7/1/21$: Resold $200$ treasury shares@$$8$ per share