Problem
Panton Inc. acquired 18,000 shares of Glotfelty Corp. several years ago. At the present time, Glotfelty is reporting the following stockholders' equity:
Common stock ($10 par value - 20,000 shares outstanding) $200,000
Additional paid-in capital $100,000
Retained earnings $300,000
Total equity $600,000
Required:
1. Glotfelty issues 5,000 shares of previously unissued stock to the public for $40 per share. None of this stock is purchased by Panton.
a. Prepare Panton's journal entry to recognize the impact of this transaction.
b. Describe how this transaction would afect Panton's books.
2. Glotfelty issues 5,000 shares of previously unissued stock to the public for $27 per share. None of this stock is purchased by Panton.
a. Prepare Panton's journal entry to recognize the impact of this transaction.
b. Describe how this transaction would afect Panton's books.