Question

When companies offer new equity security issues, they publicize the offerings in the financial press and on Internet sites. Assume the following were among the equity offerings reported in December 2018:

	New Securities Issues
	Equity
	American Materials Transfer Corporation (AMTC)—7.5 million common shares, $0.001 par, priced at $14.708 each through underwriters led by Second Tennessee Bank N.A. and Morgan, Dunavant & Co., according to a syndicate official.
	Proactive Solutions Inc. (PSI)—Offering of 9 million common shares, $0.01 par, was priced at $16.40 a share via lead manager Stanley Brothers, Inc., according to a syndicate official.

Required:
Prepare the appropriate journal entries to record the sale of both issues to underwriters. Ignore share issue costs. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations. Enter your answers in whole dollars.)

Answer 1

Answer:

Prepare the appropriate journal entries to record the sale of both issues to underwriters. Ignore share issue costs.

Event	Description	Debit $	Credit $
1	Cash	110310000
	Common Stock		7500
	Paid in capital -Excess in par		110302500
2	Cash	147600000
	Common Stock		90000
	Paid in capital -Excess in par		147510000

Explanation to the answer:

Event-1

Cash =(7.5 million x $14.708 )= 110310000

Common Stock= (7.5 million x $0.001 )=7500

Paid in capital -Excess in par= (7.5 million x $14.707 )=110302500

Event-2

Cash =(9 million x $16.40 )= 147600000

Common Stock= (9 million x $0.01 )=90,000

Paid in capital -Excess in par= (9 million x $16.39 )=147510000