Cole Corporation issues 10,000 preference shares with a $50 par value for cash at $60 per share.The entry to record the transaction will consist of a debit to Cash for $600,000 and a credit or credits to

Question

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The issue price of $60 per share is $10 more than the par value of $50 per share, resulting in a share premium of $10 per share. Therefore, the credit entry for the transaction will be split between the Preference Shares account for the par value ($50 x 10,000 shares = $500,000) and the Share Premium-Preferred Share account for the premium amount ($10 x 10,000 shares = $100,000).

Cole Corporation Issues 10,000 Preference Shares with a $50 Par