Question
Faith Evans Corporation is a regional company which is a SEC registrant. The corporations securities are thinly traded on NASDAQ. Faith Evans Corp. has issued
Faith Evans Corporation is a regional company which is a SEC registrant. The corporations securities are thinly traded on NASDAQ. Faith Evans Corp. has issued 10,060 units. Each unit consists of $503 par, 12% subordinated debenture and 10 shares of $5 par common stock The investment banker has retained 402 units as the underwriting fee. The other 9,658 units were sold to outside investors for cash at $885 per unit. Prior to this sale the 2 week ask price of common stock was $40 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. Prepare the journal entry to record Evan's transaction, under the following conditions: 1. Employing the incremental method. - has 5 entries 2. Employing the proportional method, assuming the recent price quote on the common stock reflects fair value. - has 6 entries
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started