Question

Ayayal 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 54,500 shares for cash at $53 per share. July 1 Issued 71,500 shares for cash at $58 per share. Journalize the transactions. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not Indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts.) Date Account Titles and Explanation Debit Credit

Answer 1

In the journal entries, issue proceeds in excess of par value i.e. $50, will be transferred to paid in capital in excess of par.

Required journal entries are:

Date	General Journal	Debit	Credit
Feb 1	Cash (54500 * $53)	$2888500
	Preferred stock (54500 * $50)		$2725000
	Paid in capital - Preferred stock (54500 * $3)		$163500
	(for preferred stock of $50 par issued and excess transferred to paid in capital)
Jul 1	Cash (71500 * $58)	$4147000
	Preferred stock (71500 * $50)		$3575000
	Paid in capital - Preferred stock (71500 * $8)		$572000
	(for preferred stock issued and excess transferred to paid in capital)