A company issued 1,000 shares of $1 par value preferred stock for $5 per share.What is true about the journal entry to record the issuance?

Question

Quizplus · Accepted Answer

The preferred stock is issued at $5 per share, but its par value is $1. Therefore, $1,000 is credited to Preferred Stock (1,000 shares x $1 par value), and the excess $4,000 (1,000 shares x $4) is credited to Additional Paid-In Capital.

A Company Issued 1,000 Shares of $1 Par Value Preferred