LMN issued 200 shares of its preferred stock, par $20, and 500 shares of its common stock, par $10 for a total cash consideration of $15,000. The current over-the-counter (OTC) stock prices for its stock were: Preferred, $25; Common, $20. The issue entry for the preferred and common stock combined would be as follows:
The total consideration paid equals the sum of the market values of the individual securities sole; therefore no allocation is necessary.
Cash .............................15,000
Preferred stock (200 x $20).....4,000
Common stock (500 x $10).....5,000
Contributed capital in excess of par,
Preferred stock ($25 - $20)20....1,000
Contributed capital in excess of pay,
Common stock ($20 - $10)500....5,000