Exercise 15-4

Sandhill Corporation is a regional company which is an SEC registrant. The corporations securities are thinly traded on NASDAQ. Sandhill Corp. has issued 18,500 units. Each unit consists of a $925 par, 12% subordinated debenture and 19 shares of $9 par common stock. The units were sold to outside investors for cash at $1,628 per unit. Prior to this sale, the 2-week ask price of common stock was $74 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. Need some assistance with the red incorrect mark, thank you!

Exercise 15-4 Your answer is partially correct. Try again Sandhill Corporation is a regional company which is an SEC registrant. The corporation's securities are thinly traded on NASDAQ. Sandhill Corp. has issued 18,500 units. Each unit consists of a $925 par, 12% subordinated debenture and 19 shares of $9 par common stock. The units were sold to outside investors for cash at $1,628 per unit. Prior to this sale, the 2-week ask price of common stock was74 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 Sandhill's 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.) (1) Employing the incremental method (2) Employing the proportional method, assuming the recent price quote on the common stock reflects fair value No. Account Titles and Explanation Debit Credit 30,118,000 1. Cash 17,112,500 onds Payabl 3,163,500 842,000 ommon Stock id-in Capital in Excess of Par - Common Stoc 30,118,000 17,112,500 Discount on Bonds Payable 380,278 Bonds Payabl ommon Stock 3,163,500 aid-in Capital in Excess of Par - Common Stoc 10,222,278