Sneed Corporation issues 10,000 shares of $50 par preferred stock for cash at $75 per share. The entry to record the transaction will consist of a debit to Cash for $750,000 and a credit or credits to

Question

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The entry to record the issuance of preferred stock includes a credit to Preferred Stock for the par value ($50 per share) and a credit to Paid-In Capital in Excess of Par-Preferred Stock for the excess received over par ($25 per share). Therefore, the total credit will be $500,000 (10,000 shares x $50) for Preferred Stock and $250,000 (10,000 shares x $25) for Paid-In Capital in Excess of Par-Preferred Stock, for a total credit of $750,000. Retained Earnings should not be credited as it is not related to the issuance of preferred stock. Option D is not correct as it only credits Paid-In Capital from Preferred Stock, but does not account for the par value of the preferred stock.

Sneed Corporation Issues 10,000 Shares of $50 Par Preferred Stock