Analysis Case $18-5$ Issuance of shares; share issue costs; disclosure note prepare a report $\backslash ([\backslash )$ I LO$18-4$ You are the newest member of the staff of Brinks $\backslash$& Company, a medium$-$size investment management firm. You are supervised by Les Kramer, an employee of two years. Les has a reputation as being technically sound but has a noticeable gap in his accounting education. Knowing you are knowledgeable about accounting issues, he requested you provide him with a synopsis of accounting for share issue costs. "I thought the cost of issuing securities is recorded separately and expensed over time," he stated in a handwritten memo. "But I don't see that for IBR's underwriting expenses. What gives?" He apparently was referring to a disclosure note on a page of a prospective investee's annual report, photocopied and attached to his memo. To raise funds for expansion, the company sold additional shares of its $\backslash (\backslash$$ $0\mathrm{.}10\backslash )$ par common stock. The following disclosure note appeared in the company's most recent annual report: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note $10-$Stock Transactions $($in part$)$ In February and March, the Company sold $2,395,000$ shares of Common Stock at $\backslash (\backslash$$ $22\mathrm{.}25\backslash )$ per share in a public offering. Net proceeds to the Company were approximately $\backslash (\backslash$$ $50\mathrm{.}2\backslash )$ million after the underwriting discount and offering expenses. Required: $1.$ How did IBR account for the share issue costs? $2.$ At what total amount did the shares sell to the public? $3.$ Prepare the appropriate journal entry to record the sale of the shares.