A company issued 70 shares of $30 par value preferred stock for $4,000 cash.The journal entry to record the issuance is:
A)Debit Cash $2,100;credit Preferred Stock $2,100.
B)Debit Investment in Preferred Stock $2,100;credit Cash $2,100.
C)Debit Cash $4,000;credit Preferred Stock $4,000.
D)Debit Preferred Stock $2,100,debit Investment in Preferred Stock $1,900;credit Cash $4,000.
E)Debit Cash $4,000;credit Paid-in Capital in Excess of Par Value,Preferred Stock $1,900,credit Preferred Stock $2,100.

Question

Quizplus · Accepted Answer

The company received $4,000 cash for 70 shares of $30 par value stock, which totals $2,100 (70 shares x $30). The excess amount over par value is $1,900 ($4,000 - $2,100), which is credited to Paid-in Capital in Excess of Par Value, Preferred Stock.

A Company Issued 70 Shares of $30 Par Value Preferred