4. Parker Corporation has issued 2,000 shares of common stock and 400 shares of

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4. Parker Corporation has issued 2,000 shares of common stock and 400 shares of preferred stock for a lump sum of $74,000 cash. Instructions (a) Give the entry for the issuance assuming the par value of the common stock was $5 and the fair value $30, and the par value of the preferred stock was $40 and the fair value $50. (Each valuation is on a per share basis and there are ready markets for each stock.) Show calculations (b) Give the entry for the issuance assuming the same facts as (a) above except the preferred stock has no ready market and the common stock has a fair value of $24 per share.Show calculations 5. On January 1, 2015, Warren Corporation had 1,000,000 shares of common stock outstanding. On March 1, the corporation issued 150,000 new shares to raise additional capital. On July 1, the corporation declared and issued a 2-for-1 stock split. On October 1, the corporation purchased on the market 500,000 of its own outstanding shares and retired them. Instructions Compute the weighted average number of shares to be used in computing earnings per share for 2015. Show calculations

Explanation / Answer

Part 1

Workings

Part 2

DR CR Cash 74000 Common Stock 10000 Paid-in Capital in Excess of Par—Common 45500 Preferred Stock 16000 Paid-in Capital in Excess of Par—Preferred 2500

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