Question

Shamrock Corporation issued 510 shares of $100 par value preferred stock for $57,300. Prepare Shamrock’s journal entry

Answer 1

Step-by-step explanation:

In recording journal entries of a common or preferred stock issue, the following recording points are key;

Debiting is only done for the cash proceeds from the issue.

Crediting is done for;

The preferred stock amount multiplied by the par value.

The paid in capital which is the excess of par value i.e. stock issued at a premium.

So, to find the preferred stock amount;

=Shares issued × Par Value

=510 × $100

=$51000

To get the total amount of paid in capital, we subtract the preferred stock amount from the total proceeds of the issue;

=$57300 - $51000

=$6300

Journal Entry

Cash 57300

Preferred Stock 51000

Additional Paid-In Capital 6300