Question

Logan Corporation issues 50,000 shares of $50 par value preferred stock for cash at $60 per share. The entry to record the transaction will consist of a debit to Cash for $3,000,000 and a credit or credits toa. Preferred Stock for $3,000,000.b. Preferred Stock for $2,500,000 and Paid-in Capital in Excess of Par Value—Preferred Stock for $500,000.c. Preferred Stock for $2,500,000 and Retained Earnings for $500,000.d. Paid-in Capital from Preferred Stock for $3,000,000.

Answer 1

correct option is b

Preferred Stock for $2,500,000 and Paid-in Capital in Excess of Par Value—Preferred Stock for $500,000

Step-by-step explanation:

given data

issues = 50,000 shares

preferred stock = $50 par value

cash = $60 per share

Cash = $3,000,000

solution

here entry will be as

Journal Entry are

Cash = 50000 × $60 = $3000000

cash = $3000000 Dr

and

Preferred Stock = 50000 × $50 =

Preferred Stock = $2500000

so

Paid-in Capital in Excess of Par Value - Preferred Stock = 50000 × (60-50)

Paid-in Capital in Excess of Par Value - Preferred Stock = $500000 credit

so

correct option is b

Preferred Stock for $2,500,000 and Paid-in Capital in Excess of Par Value—Preferred Stock for $500,000