The Sorrento Skies Corporation issues 16000 shares of $100 par value preferred stock for cash at $120 per share. The entry to record the transaction will consist of a debit to Cash for $1920000 and a credit or credits to

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When preferred stock is issued at a price higher than its par value, the excess amount is recorded in the account "Paid-in Capital in Excess of Par-Preferred Stock." Therefore, the entry will include a credit to Preferred Stock for the par value ($100 x 16000 = $1600000) and a credit to Paid-in Capital in Excess of Par-Preferred Stock for the excess amount ($120 - $100 = $20 x 16000 = $320000). The total credit will be $1920000.

The Sorrento Skies Corporation Issues 16000 Shares of $100 Par