Cole Corporation issues 10,000 shares of $50 par value preferred stock for cash at $60 per share. The entry to record the transaction will consist of a debit to Cash for $600,000 and a credit or credits to

Question

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The par value of the preferred stock is $50 per share, so 10,000 shares at $50 per share would equal $500,000. However, the stock was sold at $60 per share, which means there is an excess of $10 per share. This excess is recorded in the account Paid-in Capital in Excess of Par Value-Preferred Stock. Therefore, the entry to record the transaction would be a debit to Cash for $600,000 and a credit to Preferred Stock for $500,000 and Paid-in Capital in Excess of Par Value-Preferred Stock for $100,000.

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