Lump Sum Issuance of Par Value Shares

question 110

Essay

Lump sum issuance of par value shares
Chile Corp. issued 2,000 common shares and 400 preferred shares to an investor for $ 72,000 cash.
Instructions
a) Prepare the journal entry for the issuance, assuming the par value of the common shares was $ 5 and the market value was $ 30, and the par value of the preferred shares was $ 40 and the market value was $ 50.
a), except the preferred shares have no ready market and the common shares have a market value of $ 24.
b) Prepare the journal entry for the issuance, assuming the same facts as

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Definitions:

Marginal Tax Rate

The rate at which the last dollar of a person's income is taxed, demonstrating how much tax the individual will pay on an additional dollar of income.

Taxable Income

The portion of an individual's or corporation's income that is subject to taxes by the government.

Taxes

Compulsory charges imposed on individuals or entities by governments used to fund public services and government obligations.

Federal Government Spending

Expenditures by the federal government on goods, services, and public projects, part of the country's fiscal policy.