A company Issues 1.02 millon shares of preferred stock with a par value of $3.00

Question

A company Issues 1.02 millon shares of preferred stock with a par value of $3.00 at its market price of $2700 per share. The Issuance should be recorded with a deblt to Cash for: $24.48 million, a credit to Additional Pald-In Capital for $3.06 million, and a credit to Preferred Stock for $27.54 million O $27.54 million and a credit to Preferred Stock for $27.54 million. $27.54 million, a credit to Preferred Stock for $3.06 million, and a credit to Additional Paid-in Capital for $24.48 mllion O $3.06 million and a credit to Preferred Stock for $3.06 million.

Explanation / Answer

Answer

We will record the issue at its market value. So,

So the entry will be

In Million

S No. Dr. $ Cr. $ Cash (1.02 Million Shares * $27)            27.54 Preferred Stock (1.02 Million Shares * $3)              3.06 Paid-in-Capital in excess of par- Preferred Stock            24.48

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