Question

oscar corporation issues 500 shares of preferred stock with a $100 per share par value andannual dividends of 3% for $102 per share. what is the journal entry oscar corporation willmake to record this transaction?

Answer 1

The journal entry that Oscar Corporation will make to record the issuance of 500 shares of preferred stock is as follows: Cash is debited for $51,000, Preferred Stock is credited for $50,000, and Paid-in Capital in Excess of Par - Preferred Stock is credited for $1,000.

Step-by-step explanation:

The journal entry that Oscar Corporation will make to record this transaction is as follows:

Debit:

• Cash: $102 x 500 shares = $51,000

Credit:

• Preferred Stock: $100 x 500 shares = $50,000
• Paid-in Capital in Excess of Par - Preferred Stock: $2 x 500 shares = $1,000

This journal entry records the issuance of 500 shares of preferred stock at a price of $102 per share. The cash received from the sale of the stock is debited, while the preferred stock is credited at its par value of $100 per share. The difference between the issue price and par value is recorded in the Paid-in Capital in Excess of Par - Preferred Stock account.