Question

On April 1, 11,000 shares of $6 par common stock were issued at $26, and on April 7, 3,000 shares of $60 par preferred stock were issued at $108. Journalize the entries for April 1 and 7. If an amount box does not require an entry, leave it blank.

Answer 1

The journal entries to record issue of common stock are as follows:

Dr Cash $286,000

Cr Common stock($6*11000) $66000

Cr Capital paid-in excess of par value($20*11000) $220,000

Being issue of common stock at $26 per share

The journal entries for the issue of preferred stock are :

Dr Cash $324,000

Cr Preferred Stock ($60*3000) $180,000

Cr Capital paid-in excess of par value($108-$60)*3000 $144,000

Being issue of preferred stock at $108 per share

Step-by-step explanation:

Upon issuance of common stock, cash proceeds of $286000 ($26*11000) were realized which signals an increase in cash of the same amount, the journal entries for that issue is as follows:

Dr Cash $286,000

Cr Common stock($6*11000) $66000

Cr Capital paid-in excess of par value($26-$20)*11000 $220,000

However, cash proceeds realized from issue of preferred stock is $324000 ($108*3000) and the necessary journal entries are as follows:

Dr Cash $324,000

Cr Preferred Stock ($60*3000) $180,000

Cr Capital paid-in excess of par value($108-$60)*3000 $144,000

Answer 2

April 1: Debit Cash - 286,000; Credit Common stock 66,000 and PICIEP 220,000

April 7: Debit Cash - 324,000 Credit Preferred Stock 180,000 and PICIEP 144,000

Step-by-step explanation:

The question is to journalize the issue of shares both Common Stock on April 1 and Preferred Stock on April 7

April 1: Common Stock Issue

Cash = 11,000 shares x $26 = $286,000

Common Stock = 11,000 shares x $6 = $66,000

Paid in Capital in Excess of Par = $286,000 - $66,000 = $220,000

Journal Entries are as follows

Date Description Debit Credit

April 1 Cash 286,000

Common Stock 66,000

PICIEP 220,000

April 7: Preferred Stock Issue

Cash = 3,000 shares x $108 = $324,000

Preferred Stock = 3,000 shares x $60 = $180,000

Paid in Capital in Excess of Par = $324,000- $180,000= $144,000

Journal Entries are as follows

Date Description Debit Credit

April 7 Cash 324,000

Peferred Stock 180,000

PICIEP 144,000