Question

Oriole Company issues 43000 shares of $100 par value preferred stock for cash at $105 per share. The entry to record the transaction will consist of a debit to Cash for $4515000 and a credit or credits toPreferred Stock for $4300000 and Retained Earnings for $161250.Preferred Stock for $4300000 and Paid-in Capital in Excess of Par Value—Preferred Stock for $215000.Paid-in Capital from Preferred Stock for $4515000.Preferred Stock for $4515000.

Answer 1

Cash for $4515000 DEBIT

Preferred Stock for $4300000 CREDIT

Paid-in Capital in Excess of Par Value—Preferred Stock for $215000.

Step-by-step explanation:

The Cash entry is to recognize the money raised by the stock issued.

As the value of the stock was above par, it means the company record a journal entry of the par value determined as $100 in the account Preferred Stock, where is indicated the type of share issued.

The difference between the par value and the price accepted by the investor it's recorded in the account Capital in Excess of Par Value—Preferred Stock, which indicates the difference with the par value.