Shangri-La Inc. raised additional capital by selling equity to investors. The package of securities included one no par value common share, one cumulative Class A preferred share, and one noncumulative Class B preferred share. Shangri-La sold 200,000 packages for $100 each. It incurred $25,000 in costs directly related to the issuance of the securities. At the time of sale, the market value of the common and cumulative preferred shares was $60 and $35, respectively. The Class B preferred shares are a new class of shares so they did not have a market price. Shangri-La has a policy of charging share issuance costs to retained earnings.

Required:
a. Assume that the fair value of a Class B preferred share is $7. Prepare the journal entry for the issuance of the equity securities using the relative fair value (proportional) method.
b. Assume that the fair value of a Class B preferred share is $7. Using the relative fair value (proportional) method, prepare the journal entry for the issuance of the equity securities on the basis that Shangri-La had adopted a policy of allocating the share issuance costs to the related capital accounts.
c. Assume that the fair value of the Class B preferred share is not reliably measurable. Prepare the journal entry for the issuance of the equity securities.