PART A:

In preparing the journal entry to record this transaction the total amount allocated to common stock should be (round to nearest dollar): a. $ 667 b. $ 700 c. $1,500 d. $1,575 e. None of the above

PART B:

Assume the same facts as in part A above except that the market price of the preferred stock is not known. In this circumstance the total amount allocated to the preferred stock should be (round to the nearest dollar): a. $100 b. $200 c. $300 d. $1,333 e. None of the above.

PART C:

Assume that in Part A the correct allocation was:

(1) Allocated to Common- $1,700 and (2) Allocated to Preferred- $ 300. The entry to record the stock issue would be (round to nearest dollar):

Google Inc. sold 100 shares of its $1 par common stock and 20 shares of its $10 par convertible preferred stock for a lump sum of $2,100. The underwriter's fee for this transaction was $100 (net cash received on sale was therefore $2,000 ). At the date of sale the common stock was selling for $18 per share and the convertible preferred stock was selling for $30 per share. a.CashCommonStockPreferredStock2,0001,700300 b.CashRetainedEarningsCommonStockPaid-InCapital-CommonPreferredStockPaid-InCapital-Preferred2,0004001001,700200400 c.CashDiscountonStockIssueCommonStockPaid-InCapital-CommonPreferredStockPaid-InCapital-Preferred2,0004001001,700200400 d.CashCommonStockPaid-InCapital-CommonPreferredStockPaid-InCapital-Preferred2,0001001,600200100 e. None of the above