Question

wyanot company issued 1,000 shares of its 5%, $100 par value, cumulative preferred stock for $110 cash per share. the journal entry to record this transaction includes: multiple select question. $10,000 credit to additional paid-in capital - preferred. $100,000 debit to cash. $5,000 credit to preferred stock. $100,000 credit to preferred stock. $110,000 debit to cash.

Answer 1

The journal entry is $110,000 debit to cash -$100,000 credit to preferred stock -$10,000 credit to additional paid in capital- Preferred

How do you record shares in accounting?

• Common stock is initially recorded at par value, and any sums received in excess of that amount are reported in an account called capital in excess of par value.

• The recording is based on the fair value of the shares forfeited if they were issued in exchange for an item or service as opposed to cash.

• A memo entry to record the change in the number of shares and the par value per share is all that is required in a journal entry for a stock split (if the stock has a par value).

• When an employee exercises stock options, the difference—representing the increase in share value during the service period—is deducted from Additional Paid-In Capital and is credited to Common Stock for the number of shares x par value, debited from Cash for the number of shares x exercise price, and finally deducted from Cash for the remaining shares x par value.

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