E15-5 (Lump-Sum Sales of Stock with Preferred Stock) Dave Matthew Inc. issues 500 shares of $10 par value common stock and 100 shares of $100 par value preferred stock for a lump sum of $100,000.Instructions(a)Prepare the journal entry for the issuance when the market price of the common shares is $165 each and market price of the preferred is $230 each. (Round to nearest dollar.(b)Prepare the journal entry for the issuance when only the market price of the common stock is known and it is $170 per share.

See explanation section

Explanation:

Requirement A

Journal entry for the issuance when the market price of the common shares is $165 each -

Debit         Cash (500 shares, $165 market value)      $82,500                                    

Credit        Common Stock (500 shares, $10 par value)     $5,000

Credit        Paid-in-capital in excess of Par/Additional paid-in-capital, Common stock (500 shares, $165 - $10 = $155 per share in excess of par) $77,500

Journal entry for the issuance when the market price of the preferred share is $230 each -

Debit         Cash (100 shares, $230 market value)      $23,000                                    

Credit        Preferred Stock (100 shares, $100 par value)     $10,000

Credit        Paid-in-capital in excess of Par/Additional paid-in-capital, Preferred stock (100 shares, $230 - $100 = $130 per share in excess of par) $13,000

Requirement B

Journal entry for the issuance when only the market price of the common stock is $170 per share -

Debit         Cash (500 shares, $170 market value)      $85,000                                    

Credit        Common Stock (500 shares, $10 par value)     $5,000

Credit        Paid-in-capital in excess of Par/Additional paid-in-capital, Common stock (500 shares, $170 - $10 = $160 per share in excess of par) $80,000

As preferred stock's market price is not given, the par value becomes the market value for the preferred stock. The journal to entry to record preferred stock -

Debit         Cash (100 shares, $100 market value)      $10,000                                    

Credit        Preferred Stock (100 shares, $100 par value)     $10,000

answer; ///(d); determining who competes most closely   with whom evaluating whether industry driving forces and competitive pressure favor some strategic groups and hurt others, and ascertaining whether the profit potential of different strategic groups varies due to the strengths and weaknesses in each groups respective market positions;