Minnestota Corporation has two classes of stock: common, $4 par value; and prefe
ID: 2477295 • Letter: M
Question
Minnestota Corporation has two classes of stock: common, $4 par value; and preferred, $20 par value. Requirements Journalize Minnesota's issuance of 3,500 shares of common stock for $7 per share. Journalize Minnesota's issuance of 3,500 shares of preferred stock for a total of $70,000. Requirement 1. Journalize Minnesota's issuance of 3,500 shares of common stock for a total of $7 per share. (Record debit) Requirement 2. journalize Minnesota's issuance of 3,500 shares of preferred stock for a total of $70,000. (record)Explanation / Answer
Answer:
1) Journal Entry for issuance of 3,500 shares of common stock for $7 per share
Date
Accounts and Explanation
Debit
Credit
Cash A/c Dr.
$24,500
To Common Stock (3,500*$4)
$14,000
To Paid in Capital in excess of par - common stock (3,500*3)
$10,500
(Being common stock issued at excess of par value)
.
2) Journal Entry for issuance of 3,500 shares of preferred stock for a total of $70,000
Date
Accounts and Explanation
Debit
Credit
Cash A/c Dr.
$70,000
To Preferred Stock (3,500*$20)
$70,000
(Being preferred stock issued at par)
Date
Accounts and Explanation
Debit
Credit
Cash A/c Dr.
$24,500
To Common Stock (3,500*$4)
$14,000
To Paid in Capital in excess of par - common stock (3,500*3)
$10,500
(Being common stock issued at excess of par value)