Martinez Corporation is a regional company which is in an SEC registrant. The corporations securities are thinly traded on NASDAQ Martinez Corp has issues 15,500 units. Each unit consists of a $775 par, 12% subordinated debenture and 16 shares of $8 par common stock. The units were sold to outside investors for cash at $1364 per unit. Prior to this sale the 2 week ask price of common stock was $62 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 Martinezs transaction, under the following conditions.

1. Employing the incremental method.

2. Employing the proportional method, assuming the recent price quote on the common stock reflects fair value.