Answer and Explanation:
a. The journal entries are shown below:
On Feb 1
Cash Dr $2,782,000 (53,500 shares × $52)
To Preferred stock $2,675,000 (53,500 shares × $50)
To Paid in capital in excess of par - Preferred stock $107,000
(Being the issuance of the preferred stock is recorded)
On July 1
Cash Dr $4,018,500 (70,500 shares × $57)
To Preferred stock $3,525,000 (70,500 shares × $50)
To Paid in capital in excess of par - Preferred stock $493,500
(Being the issuance of the preferred stock is recorded)
For recording these both transactions we debited the cash as it increased the assets and credited the preferred stock and additional paid in capital as it also increased the stockholder equity
b. The posting is as follows
Preferred Stock
Date Debit Date Credit
1-Feb $2,675,000
1-Jul $3,525,000
Paid in capital in excess of par - Preferred stock
Date Debit Date Credit
1-Feb $107,000
1-Jul $493,500
c. Now the presentation is shown below:
Preferred stock, $50 par value, 124,000 issued and outstanding - $6,200,000
Paid in capital in excess of par - Preferred stock - $600,500
It is presented on the stockholder equity statement
