Cole Corporation issues 12,000 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 $720,000 and a credit or credits to

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The issuance of preference shares at a price higher than their par value results in the collection of excess funds over and above the par value of the shares. This amount is recorded in the Share Premium account. In this case, the total amount collected is $720,000 (12,000 shares x $60 per share). As the shares have a par value of $50, the initial amount credited to Share Capital-Preference would be 12,000 x $50 = $600,000. The remaining $120,000 would be credited to the Share Premium-Preference account. Therefore, the correct entry would be to debit Cash for $720,000 and credit Share Capital-Preference for $600,000 and Share Premium-Preference for $120,000.

Cole Corporation Issues 12,000 Preference Shares with a $50 Par