Prepare the journal entry to record the previous transaction

Assignment Help Accounting Basics
Reference no: EM13511461

E13-4B (Lump-Sum Sale of Stock with Bonds) Zurg, Inc. is an SEC registrant, and its securities are thinly traded on NASDAQ (National Association of Securities Dealers Quotes). Zurg, Inc. issued 10,000 units. Each unit consists of a $1,000 par, 16% subordinated debenture and 5 shares of $5 par common stock. The investment banker has retained 500 units as the underwriting fee. The other 9,500 units were sold to outside investors for cash at $1,150 per unit. Prior to this sale the 2-week ask price of common stock was $25 per share. Sixteen per- cent is a reasonable market yield for the debentures, and therefore the par value of the bonds is equal to the fair value.
Instructions
(a) Prepare the journal entry to record the previous transaction, under the following conditions.
(1) Employing the incremental method.
(2) Employing the proportional method, assuming the recent price quotes on the common stock reflect fair
value.
(b) Briefly explain which method is, in your opinion, the better method.

Reference no: EM13511461

Questions Cloud

Evaluate the density of hydrogen sulfide gas : Calculate the density of hydrogen sulfide gas, H2S, at 58°C and 896 mm Hg. Obtain the density in grams per liter.
Prepare a comparative income statement : 1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to net sales for each of the years. Round to one decimal place.
Find which object is moving faster at the bottom : A solid uniform marble and a block of ice, each with the same mass, start from rest at the same height, Which object is moving faster at the bottom, the ice or the marble
Explain 2-butene-1-thiols is one component of skunk spray : 2-butene-1-thiols is one component of skunk spray. How whould you synthesize this substance from methyl 2-buenoate? From 1,3-butadiene
Prepare the journal entry to record the previous transaction : (a) Prepare the journal entry to record the previous transaction, under the following conditions.
What would its angular speed have to be : An airplane propeller is 2.18 m in length (from tip to tip) with mass 97.0 kg and is rotating at 2600 rpm (rev/min) about an axis through its center. What would its angular speed have to be
What is the mass of the cylinder : A light string is wrapped around the outer rim of a solid uniform cylinder of diameter 75.0 cm that can rotate without friction about an axle through its center. What is the mass of the cylinder
State balanced half-cell reactions for ch2o oxidation : Write balanced half-cell reactions for CH2O oxidation and SO4 reduction to HS and then add them together to get the balanced overall redox reaction.
Find the final velocity of the combined railroad cars : A 10,000 kg empty railroad car moving at 3 m/s collides with a loaded railroad car weighing 196,000 N and couples with it

Reviews

Write a Review

Accounting Basics Questions & Answers

  Why may companies have an incentive to finance their

why might companies have an incentive to finance their foreign operations with as much debt as possible?a. interest

  Preparing a

preparing a comprehensive

  What are the consolidated sales and cost of goods sold

Top company holds 90% of Bottom Company's common stock. In current year, Top reports sales of $800,000 and Cost of Goods sold of $600,000. For this sam period,

  All corporate functions are performed in godalming

SIMCO Commercial Corporation (SCC) is located in Godalming, United Kingdom (U.K.). SCC is owned by an investment group located in London and all corporate functions are performed in Godalming.

  On the navigation bar make the following selections to

on the navigation bar make the following selections to record a payment on account a. on the customers amp sales

  Determine the annual unit sales volume at which the firm

zodiac company has decided to introduce a new product which can be manufactured by either a computer-assisted

  Identify the generic market positioning

Prove the financial ability of this firm to execute this vision and strategy using tools, skills, and knowledge learned in the MBA program. You must provide hard numbers to defend your position.

  Goal of achieving zero defects

Some companies implement systems to reduce defects in finished products with the goal of achieving zero defects. What are these systems called?

  Restrictions of the internal control system

Identify the limitation of the internal control system. Provide at least 3 limitations. Provide at least 2 examples of internal control procedures and explain how these procedures can be implemnted. Identify symptoms of a lack of internal control.

  Kelly clarkson manufactures a number of products

Kelly Clarkson manufactures a number of products. The standards relating to one of these products are shown below, along with actual cost data for May.

  What will be the annual rental

A company purchased an aircraft for $400,000 and leased it for 20 years. If the company wants to earn an annual return of 10% what will be the annual rental.

  Gain or loss from disposition of the real estate

Straight-line depreciation of $162,000 had been taken on the building. What is the amount and initial character of the gain or loss from disposition of the real estate? Is any of the gain unrecaptured § 1250 (25%) gain?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd