Blossom Corporation issued 392 shares of $10 par value common stock and 128 shares of $50 par value preferred stock for a lump sum of $17,424. The common stock has a market price of $20 per share, and the preferred stock has a market price of $90 per share. Prepare the journal entry to record the issuance.

The joural entry to record the issuance of the shares is given below.

Explanation:

Fair Market Value:

392 * 20 = 7840 = 40.49%

128 * 90 = 11520 = 59.51%

19360

Lump Sum Amount:

Common Stock = $17,424 * 40.49% = 7055

Preferred Stock = $17,424 * 59.51% = 10369

Account Title Dr Cr

Cash 17,424

Preferred stock (128 * 50) 6400

Additional paid-in capital-preferred 3969

Common stock (392x $10) 3920

Additional paid-in capital-common 3135