ate Accounting, Vol. 2, 4ce es in Equity sclosure stration of Equity nces Between Relevant Chapter 13 Equities Prepare the journal entries required in January 2021, July 2021, and December 2021 assuming that Rita Inc. follows ASPE pertaining to accounting for equity transactions. P13-17. Accounting for bundled sales and share issuance costs (L.O. 13-3) (Medium 20 minutes) Shangri-La Inc. raised additional capital by selling equity to investors. The package of securities included one no par value common share, one cumulative Class A preferred share, and one non-cumulative Class B preferred share. Shangri-La sold 200,000 packages for $100 each. It incurred $25,000 in costs directly related to the issuance of the securities. At the time of sale, the market value of the common and cumulative preferred shares was $60 and $35, respectively. The Class B preferred shares are a new class of shares so they did not have a market price. Shangri-La has a policy of charging share issuance costs to retained earnings. : Shares and Treasury -int Questions Required a. Assume that the fair value of a Class B preferred share is $7. Prepare the journal entry for the issuance of the equity securities using the relative fair value (proportional) method. b. Assume that the fair value of a Class B preferred share is $7. Using the relative fair value (proportional) method, prepare the journal entry for the issuance of the equity securities on the basis that Shangri-La had adopted a policy of allocating the share issuance costs to the related capital accounts. c. Assume that the fair value of the Class B preferred share is not reliably measurable. Prepare the journal entry for the issuance of the equity securities. P13-18. Accounting for contributed capital (L.O. 13-3) (Medium - 10 minutes) Accounting standards do not permit the recognition of capital transactions (those involving owners acting as owners) to flow through net income. Explain why