(Lump-Sum Sales of Stock with Preferred Stock)

Black Diamond Inc. issues 2,500 shares of $1 par value common stock and 1,000 shares of $50 par value preferred stock for a lump sum of $275,000.

Instructions:

a) Prepare the journal entry for the issueance when the market value of the common shares is $95 each and market value of the preferred is $60 each.

b) Prepare the journal entry for the issuance when only the market value of the common stock is known and it is $90 per share.