The Cada Corporation is authorized to issue 10,000 shares of $100 par, convertible, callable preferred stock and 80,000 shares of no-par, no-stated-value common stock. There are currently 7,000 shares of preferred and 30,000 shares of common stock outstanding. The following are several alternative transactions:
1. Purchased land by issuing 640 shares of preferred stock and 1,000 shares of common stock. Preferred and common are currently selling at $113 and $36 per share, respectively. No reliable appraisal of the land is available.
2. Same as transaction 1, except that land is appraised at $104,000 and the preferred stock has no current market value.
3. Issued, for $99,000 cash, a combination of 400 shares of preferred stock and bonds payable with a face value of $50,000. Currently, the preferred stock is selling for $120 per share and the bonds at 104.
4. Same as transaction 3, except that the bonds do not have a current market value.
5. Same as transaction 3, except that the preferred stock does not have a current market value.
6. Preferred stockholders (who had originally paid the corporation $110 per share for their stock) convert 6,500 preferred shares into 19,500 shares of common stock. The current market prices of the preferred stock and the common stock are $120 and $41 per share, respectively.
7. The corporation calls the 7,000 shares of preferred stock (originally issued at $110 per share) at $123 per share. Common stock is currently selling for $42 per share. Stockholders elect not to convert into common stock.
8. Same as transaction 7, except that stockholders owning 2,000 shares of preferred stock elect to convert each share into three shares of common stock. The remaining 5,000 preferred shares are retired.
Required
Prepare the journal entry necessary to record each transaction. Below each entry, explain your reason for the values used.