Exercise 15-4
Faith Evans Corporation is a regional company which is an SECregistrant. The corporationâs securities are thinly traded onNASDAQ. Faith Evans Corp. has issued 11,150 units. Each unitconsists of a $558 par, 12% subordinated debenture and 11 shares of$6 par common stock. The investment banker has retained 446 unitsas the underwriting fee. The other 10,704 units were sold tooutside investors for cash at $981 per unit. Prior to this sale,the 2-week ask price of common stock was $45 per share. Twelvepercent is a reasonable market yield for the debentures, andtherefore the par value of the bonds is equal to the fairvalue.
(a) Prepare the journal entry to record Evansâ transaction,under the following conditions. (Round answers to 0 decimal places,e.g. $38,487. Credit account titles are automatically indented whenamount is entered. Do not indent manually. If no entry is required,select "No Entry" for the account titles and enter 0 for theamounts.)
Exercise 15-4
Faith Evans Corporation is a regional company which is an SECregistrant. The corporationâs securities are thinly traded onNASDAQ. Faith Evans Corp. has issued 11,150 units. Each unitconsists of a $558 par, 12% subordinated debenture and 11 shares of$6 par common stock. The investment banker has retained 446 unitsas the underwriting fee. The other 10,704 units were sold tooutside investors for cash at $981 per unit. Prior to this sale,the 2-week ask price of common stock was $45 per share. Twelvepercent is a reasonable market yield for the debentures, andtherefore the par value of the bonds is equal to the fairvalue.
(a) Prepare the journal entry to record Evansâ transaction,under the following conditions. (Round answers to 0 decimal places,e.g. $38,487. Credit account titles are automatically indented whenamount is entered. Do not indent manually. If no entry is required,select "No Entry" for the account titles and enter 0 for theamounts.)
