Answer and Explanation:
The journal entries are shown below:
On Oct 31
Cash (400,000 × $18) $7,200,000
To Common stock (400,000 × $10) $4,000,000
To Paid in capital in excess of par value - common stock $3,200,000
(Being the issuance of the common stock is recorded)
For recording this we debited the cash as it increased the assets and credited the common stock and paid in capital as it also increased the stockholder equity
On Nov 19
Cash (50,000 × $80) $4,000,000
To Preferred stock (50,000 × $75) $3,750,000
To Paid in capital in excess of par value - Preferred stock $250,000
(Being the issuance of the preferred stock is recorded)
For recording this we debited the cash as it increased the assets and credited the common stock and paid in capital as it also increased the stockholder equity
