Cooke Corporation issues 10,000 shares of $50 par value preferred stock for cash at $80 per share.The entry to record the transaction will consist of a debit to Cash for $800,000 and a credit or credits to

Question

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The $50 par value of the preferred stock multiplied by 10,000 shares equals $500,000. Since the stock was sold at $80 per share, the total cash received was $800,000. The difference between the par value and the issue price per share is called the "Paid-in Capital in Excess of Par-Preferred Stock" and is calculated as $30 per share ($80 issue price minus $50 par value). Therefore, the entry to record the transaction will be a debit to Cash for $800,000 and a credit to Preferred Stock for $500,000 and Paid-in Capital in Excess of Par-Preferred Stock for $300,000.

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