Davis, Incorporated, acquired 16,000 shares of Maxwell
company several years ago. At the present time, Maxwell is reporting $800,000
as total stockholders’ equity, which is broken down as follows:Common Stock ($10 par value) …………..$200,000Additional paid-in capital………………230,000Retained earnings………………………370,000Total……………………………..$800,000View the following cases as independent situations:a) Maxwell issues 5,000 shares of previously unissued common
stock to the public for $50 per share. Davis purchased none of this stock. What
journal entry should Davis make to recognize the impact of this stock
transaction?
b) Maxwell issues 4,000 shares of previously unissued common
stock to the public at $25 per share. Davis purchased none of this stock. What
journal entry should Davis make to recognize the impact of this stock
transaction?