Question

Logan Corporation issues 50,000 shares of $50 par value preferred stock for cash at $60 per share. The entry to record the transaction will consist of a debit to Cash for $3,000,000 and a credit or credits toa. Preferred Stock for $3,000,000.b. Preferred Stock for $2,500,000 and Paid-in Capital in Excess of Par Value—Preferred Stock for $500,000.c. Preferred Stock for $2,500,000 and Retained Earnings for $500,000.d. Paid-in Capital from Preferred Stock for $3,000,000.

Answer 1

Answer:

correct option is b  

Preferred Stock for $2,500,000 and Paid-in Capital in Excess of Par Value—Preferred Stock for $500,000

Explanation:

given data

issues = 50,000 shares

preferred stock = $50 par value

cash = $60 per share

Cash = $3,000,000

solution

here entry will be as

Journal Entry are

Cash =  50000 × $60 =  $3000000  

cash = $3000000       Dr

and

Preferred Stock =  50000 × $50 =

Preferred Stock =  $2500000

so  

Paid-in Capital in Excess of Par Value - Preferred Stock =  50000 × (60-50)

Paid-in Capital in Excess of Par Value - Preferred Stock = $500000 credit

so

correct option is b  

Preferred Stock for $2,500,000 and Paid-in Capital in Excess of Par Value—Preferred Stock for $500,000