Question

Sneed Corporation issues 9,700 shares of $49 par preferred stock for cash at $66 per share. The entry to record the transaction will consist of a debit to Cash for $640,200 and a credit or credits to
a.Preferred Stock for $475,300 and Paid-In Capital in Excess of Par—Preferred Stock for $164,900.

b.Paid-In Capital from Preferred Stock for $640,200.

c.Preferred Stock for $640,200.

d.Preferred Stock for $475,300 and Retained Earnings for $164,900.

Answer 1

Answer:

a.Preferred Stock for $475,300

and Paid-In Capital in Excess of Par—Preferred Stock for $164,900.

Explanation:

The par value it's a minimum price that the company assigns to the issued shares only to be used in the accounting system but it's not related to market price.    

This par value will be shown as a separate value in the section of stockholders' equity, reported under the item Paid-in-Capital, the difference with the market price it's reported as Preferred Stock.    

Cash                                                                            $640.200  Debit  

Preferred Stock                                                     $475.300  Credit  

Paid-In Capital in Excess of Par—Preferred Stock  $164.900  Credit