Question

Sneed Corporation issues 12,700 shares of $49 par preferred stock for cash at $63 per share. The entry to record the transaction will consist of a debit to Cash for $800,100 and a credit or credits to

Answer 1

Answer:

Dr Cash 800,100

    Cr Preferred stock 622,300

    Cr Additional paid in capital, preferred stock 177,800

Explanation:

Preferred stocks and common stocks are part of stockholders' equity. Whenever they are sold above par value, the difference must be recorded as additional paid in capital. You must also specify which stocks were sold at a higher value.