Question

Shamrock, Inc. issues 8,000 shares of $108 par value preferred stock for cash at $111 per share. Journalize the issuance of the preferred stock. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

Answer and Explanation:

The journal entry to record the issuance of the preferred stock is shown below:

Cash (8,000 shares × $111) $888,000  

       To Preferred stock (8,000 × $108)  $864,000

       To Paid in capital in excess of par - Preferred stock  $24,000

(Being the issuance of the preferred stock is recorded)

For recording this we debited the cash as it increased the assets and credited the preferred stock and paid in capital as it also increased the stockholder equity