Cooke Corporation issues 10,000 shares of $50 par value preferred stock for cash at $60 per share. In the stockholders' equity section, the effects of the transaction above will be reported

Question

Quizplus · Accepted Answer

The issuance of preferred stock for more than its par value results in a credit to the capital stock account for the par value and a credit to the additional paid-in capital account for the excess of the issue price over the par value. Therefore, the effects of the transaction will be reported under both the capital stock and additional paid-in capital sections.

Cooke Corporation Issues 10,000 Shares of $50 Par Value Preferred