Question

Sarasota Corp. is authorized to issue both preferred and common stock. The par value of the...

Sarasota 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. 1 Issued  50,800 shares for cash at $ 128 per share.
July 1

Issued  150,600 shares for cash at $ 71 per share.

a. Journalize the transactions.

b. Post to the stockholders’ equity accounts. (Use T-accounts.)

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Answer #1

Journal entry

Date account and explanation debit credit
Feb 1 Cash (50800*128) 6502400
Preferred stock 2540000
Paid in capital in excess of par value-preferred stock 3962400
(To record preferred stock)
July 1 Cash (150600*71) 10692600
Preferred stock 7530000
  Paid in capital in excess of par value-preferred stock 3162600
(To record preferred stock)

T Account

Preferred stock

Cash 2540000
Cash 7530000

Paid in capital in excess of par value

Cash 3962400
Cash 3162600
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