P$13-18.$ Accounting for bundled sales and share issuance costs $($Medium $-20$ minutes$)$

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 non$-$cumulative 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 issuan 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$.$