Pilsen Company issues 12% bonds with a face value of $10,000 and 600 shares of $10 par common stock in a combined sale, receiving total proceeds of $23,000 on December 31

Accounting Sep 06, 2020

Pilsen Company issues 12% bonds with a face value of $10,000 and 600 shares of $10 par common stock in a combined sale, receiving total proceeds of $23,000 on December 31.

Record the transaction for each independent assumption shown:1.The common stock has a current market value of $21 per share; the market value of the bonds is not known.2.The common stock has a current market value of $24.50 per share; the bonds are selling at 98.

Expert Solution

Working note:-

Market value of common stock = 600*$24.50

= $14,700

Market value of Bonds = $10,000 * 98%

= $9,800

Total Market value = $14,700 + $9,800

= $24,500

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