The Nice Corporation issues 8,000 shares of $100 par value preferred stock for cash at $110 per share. The entry to record the transaction will consist of a debit to Cash for $880,000 and a credit or credits to

Question

Quizplus · Accepted Answer

The entry to record the issuance of preferred stock at a price above par value involves allocating the proceeds between the preferred stock account and the additional paid-in capital account. The preferred stock account will be credited for the total par value of the stock issued ($100 x 8,000 = $800,000), while the excess of the cash received over the par value of the stock will be credited to the additional paid-in capital account ($110 x 8,000 - $800,000 = $80,000). Therefore, the correct answer is D.

The Nice Corporation Issues 8,000 Shares of $100 Par Value