Question

A company is authorized to issue 10,000 shares of $150 par value, 9%, cumulative, fully participating preferred stock and 500,000 shares of $10 par value common stock. Prepare journal entries to record the following selected transactions that occurred during the company's first year of operations: (10 Points)

March 15 Exchanged 750 shares of preferred stock for land with a market value of $125,000.

August 2 Sold 250 shares of preferred stock for $150 cash per share.

November 12 Sold 1,000 shares of preferred stock at $175 cash per share

Answer:

Answer 1

Date	General Journal	Debit ($)	Credit ($)
March 15	Land	125,000
	Preferred Stock [750 shares * $150]		112,500
	Paid in Capital in Excess of Par -Preferred Stock		12,500
	(To record issue of preferred stock in exchange of land)
August 2	Cash	37,500
	Preferred Stock [250 shares * $150]		37,500
	(To record issue of preferred stock at par)
November 12	Cash [1,000 shares * $175]	175,000
	Preferred Stock [1,000 shares * $150]		150,000
	Paid in Capital in Excess of Par -Preferred Stock		25,000
	(To record issue of preferred stock at premium)