Accounting for preferred stock at issuance is similar to that for common stock

Accounting for preferred stock at issuance is similar

This preview shows page 44 - 50 out of 73 pages.

Accounting for preferred stock at issuance is similar to that for common stock. Accounting for Preferred Stock LO 2 Cumulative Preferred Stock : if any dividends have been omitted in the past, they must be paid out to preferred shareholders first, before common shareholders can receive dividends.
Image of page 44
13-45 Illustration: Stine Corporation issues 10,000 shares of $10 par value preferred stock for $12 cash per share. The journal entry to record the issuance is: Preferred stock may have a par value or no-par value. Accounting for Preferred Stock Cash 120,000 Preferred Stock (10,000 x $10) 100,000 Paid-in Capital in Excess of Par— Preferred Stock 20,000 LO 2
Image of page 45
DO IT!Issuance of Stock2Cayman Corporation begins operations on March 1by issuing 100,000 shares of $1 par value common stock for cash at $12 per share. On March 15, it issues 5,000 shares of common stock to attorneys in settlement of their bill of $50,000 for organization costs. On March 28, Cayman Corporation issues 1,500 shares of $10 par value preferred stock for cash at $30 per share. Journalize the issuance of the common and preferred shares, assuming the shares are not publicly traded.
Image of page 46
13-47 LO 2 DO IT!Issuance of Stock2Cayman Corporation begins operations on March 1 by issuing 100,000 shares of $1 par value common stock for cash at $12 per share. On March 15, it issues 5,000 shares of common stock to attorneys in settlement of their bill of $50,000 for organization costs. On March 28, Cayman Corporation issues 1,500 shares of $10 par value preferred stock for cash at $30 per share. Journalize the issuance of the common and preferred shares, assuming the shares are not publicly traded. Mar. 15 Organization Expense 50,000 Common Stock (5,000 x $1) 5,000 Paid-in Capital in Excess of Par— Common Stock 45,000
Image of page 47
DO IT!Issuance of Stock2Cayman Corporation begins operations on March 1 by issuing 100,000 shares of $1 par value common stock for cash at $12 per share. On March 15, it issues 5,000 shares of common stock to attorneys in settlement of their bill of $50,000 for organization costs. On March 28, Cayman Corporation issues 1,500 shares of $10 par value preferred stock for cash at $30 per share. Journalize the issuance of the common and preferred shares, assuming the shares are not publicly traded.
Image of page 48
13-49 Paid-in Capital Retained Earnings Account Paid-in Capital in Excess of Par Account Less: Treasury Stock Account Two Primary Sources of Equity Common Stock Account Preferred Stock Account LO 3 LEARNING OBJECTIVE
Image of page 49
Image of page 50

You've reached the end of your free preview.

Want to read all 73 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture