The Sneed Corporation issues 10,000 shares of $50 par value 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
A) Preferred Stock for $750,000.
B) Preferred stock for $500,000 and Paid-in Capital in Excess of Par Value-Preferred Stock for $250,000.
C) Preferred Stock for $500,000 and Retained Earnings for $250,000.
D) Paid-in Capital from Preferred Stock for $750,000.

Question

Quizplus · Accepted Answer

When a corporation issues preferred stock for more than its par value, the excess amount above par is recorded as "Paid-in Capital in Excess of Par Value-Preferred Stock". Therefore, the entry to record the transaction would be a debit to Cash for $750,000 and a credit to Preferred Stock for $500,000 and a credit to Paid-in Capital in Excess of Par Value-Preferred Stock for $250,000.

The Sneed Corporation Issues 10,000 Shares of $50 Par Value