Exercise 15-4

Faith Evans Corporation is a regional company which is an SEC registrant. The corporations securities are thinly traded on NASDAQ. Faith Evans Corp. has issued 11,150 units. Each unit consists of a $558 par, 12% subordinated debenture and 11 shares of $6 par common stock. The investment banker has retained 446 units as the underwriting fee. The other 10,704 units were sold to outside investors for cash at $981 per unit. Prior to this sale, the 2-week ask price of common stock was $45 per share. Twelve percent is a reasonable market yield for the debentures, and therefore the par value of the bonds is equal to the fair value.

(a) Prepare the journal entry to record Evans transaction, under the following conditions. (Round answers to 0 decimal places, e.g. $38,487. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)