Donahue Corporation is authorized by its charter from the state of Illinois to i

Question

Donahue Corporation is authorized by its charter from the state of Illinois to issue 750 shares of preferred stock with a 7 percent dividend rate and a par value of $50 per share and 22,000 shares of common stock with a par value of $0.01 per share. On January 1, 2009, Donahue Corporation issues 250 shares of preferred stock at $55 per share and 12,000 shares of common stock at $13 per share. Prepare the journal entry to record the issuance of the common stock DEBIT CREDIT CREDIT Prepare the journal entry to record the issuance of the preferred stock DEBIT CREDIT CREDIT

Explanation / Answer

Journal Entry

1. Issure of common stock

Cash A/c Dr. $156000

To Common Stock A/c cr. $120

To Excess of Par, on Common Stock A/c Cr. $155880

2. Issue of Preferred Stock

Cash A/c Dr. $13750

To 7% Preferred Stock A/c cr. $12500

To Excess of Par, on 7% Preferred Stock A/c Cr. $1250

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