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3 October, 13:34

Marigold Corp. is authorized to issue both preferred and common stock. The par value of the preferred is $50. During the first year of operations, the company had the following events and transactions pertaining to its preferred stock. Feb. 1Issued 48,500 shares for cash at $51 per share. July 1Issued 58,000 shares for cash at $59 per share. Journalize the transactions.

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  1. 3 October, 14:16
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    Dr cash $ 2,473,500.00

    Cr preferred stock $ 2,425,000.00

    Cr paid-in capital in excess of par-preferred stock $48,500

    Dr cash $ 3,422,000.00

    Cr preferred stock $ 2,900,000

    Cr paid-in capital in excess of par-preferred stock $522,000

    Explanation:

    The issue of preferred shares on Feb 1 would result in cash proceeds of $ $2,473,500.00 i. e (48,500*$51)

    The proceeds would be debited to cash while preferred stock account is credited with par amount of $ 2,425,000.00 (48,500*$50) and the remaining amount of $ 48,500.00 is credited to paid-in capital in excess of par-preferred stock.

    The issue of preferred shares on July 1 would result in cash proceeds of $3,422,000.00 i. e (58,000*$59)

    The proceeds would be debited to cash while preferred stock account is credited with par amount of $ 2,900,000.00 (58000*$50) and the remaining amount of $ 522,000.00 is credited to paid-in capital in excess of par-preferred stock
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