A corporation received a subscription for 200 shares of 10 percent, $100 par-value preferred stock at $103 a share. The entry to record this transaction consists of a debit to Subscriptions Receivable
-Preferred for $20,600 and a credit to:

Question

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The entry to record the subscription is a debit to Subscriptions Receivable-Preferred for the total subscription amount, which is $20,600 ($103 per share x 200 shares). The credit will be split between two accounts: Preferred Stock Subscribed and Paid-in Capital in Excess of Par Value-Preferred Stock.

The credit to Preferred Stock Subscribed will be equal to the par value of the preferred stock subscribed, which is $20,000 ($100 par value x 200 shares). The remaining $600 ($20,600 - $20,000) will be credited to Paid-in Capital in Excess of Par Value-Preferred Stock, as this represents the amount investors are willing to pay over and above the par value to subscribe to the preferred stock. Therefore, the correct option is C.

A Corporation Received a Subscription for 200 Shares of 10