Taylor Corporation issues 20000 shares of $50 par value preferred stock for cash at $90 per share. In the stockholders' equity section the effects of the transaction above will be reported

Question

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When a company issues stock for more than its par value, the excess amount above par value is recorded in the additional paid-in capital section of stockholders' equity. In this case, the preferred stock has been issued for $90 per share which is $40 ($90-$50) more than its par value of $50. Therefore, $40 per share will be recorded in the additional paid-in capital section, and the remaining $50 per share will be recorded in the capital stock section. Thus, the effects of the transaction will be reported under both the capital stock and additional paid-in capital sections.

Taylor Corporation Issues 20000 Shares of $50 Par Value Preferred