Question

Brief Exercise 10-40 (Algorithmic) Recording the Sale of Common and Preferred Stock At the end of its first year of operations, Mulligan Corporation has outstanding shares of 82,000 common stock and 17,000 preferred stock. The State of Ohio authorized Mulligan to issue 18,000 shares of 6% preferred stock with a par value of $35 per share and 83,000 shares of common stock with a par value of $14 per share. Any preferred stock sold during the year had a selling price of $49.00 per share. Mulligan's common stock was issued at $28. Required: Prepare the journal entry to record the issuance of stock during the year. Cash Preferred Stock Additional Paid-In Capital-Preferred Stock Common Stock Additional Paid-In Capital-Common Stock (Record sale of preferred and common stock)

Answer 1

Debit $ 3,129,000 Journal Entries Account Title and Explanation Cash Preferred Stock Additional Paid-In Capital-Preferred Stock Common Stock Additional Paid-In Capital-Common Stock (To record sale of preferred and common stock) Credit (refer workings below) $ 595,000 (17,000 shares * $ 35) $ 238,000 (17,000 shares * $ 14) $ 1,148,000 (82,000 shares * $ 14) $ 1,148,000 (82,000 shares * $ 14) Cash received Issue of common stock Issue of preferred stock Total cash received $ 2,296,000 (82,000 shares * $ 28) $ 833,000 (17,000 shares * $ 49) $ 3,129,000