The Northern Corporation issues 7,000 shares of $100 par value preferred stock for cash at $120 per share. The entry to record the transaction will consist of a debit to Cash for $840,000 and a credit or credits to

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The preferred stock was issued at a premium of $20 per share ($120-$100). The total premium received is $140,000 ($20 x 7,000 shares). Therefore, the entry should credit Preferred Stock for the par value amount of $700,000 and credit Paid-in Capital in Excess of Par-Preferred Stock for the premium amount of $140,000, resulting in a total credit of $840,000.

The Northern Corporation Issues 7,000 Shares of $100 Par Value