A company is authorized to issue 10,000 shares of $150 par value, 9%, cumulative

Question

A company is authorized to issue 10,000 shares of $150 par value, 9%, cumulative, fully participating preferred stock and 500,000 shares of $10 par value common stock. Prepare journal entries to record the following selected transactions that occurred during the company's first year of operations: (10 Points)

March 15 Exchanged 750 shares of preferred stock for land with a market value of $125,000.

August 2 Sold 250 shares of preferred stock for $150 cash per share.

November 12 Sold 1,000 shares of preferred stock at $175 cash per share

Answer:

Explanation / Answer

Date General Journal Debit ($) Credit ($) March 15 Land 125,000 Preferred Stock [750 shares * $150] 112,500 Paid in Capital in Excess of Par -Preferred Stock 12,500 (To record issue of preferred stock in exchange of land) August 2 Cash 37,500 Preferred Stock [250 shares * $150] 37,500 (To record issue of preferred stock at par) November 12 Cash [1,000 shares * $175] 175,000 Preferred Stock [1,000 shares * $150] 150,000 Paid in Capital in Excess of Par -Preferred Stock 25,000 (To record issue of preferred stock at premium)

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