The Sneed Corporation issues 10,000 shares of $50 par 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 $500,000 and Retained Earnings for $250,000.

b. Preferred Stock for $750,000.

c. Paid-in Capital from Preferred Stock for $750,000.

d. Preferred stock for $500,000 and Paid-in Capital in Excess of Par ValuePreferred Stock for $250,000.

Question

Business

Zachery Stanton

14 May, 11:01

The Sneed Corporation issues 10,000 shares of $50 par 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 $500,000 and Retained Earnings for $250,000.

b. Preferred Stock for $750,000.

c. Paid-in Capital from Preferred Stock for $750,000.

d. Preferred stock for $500,000 and Paid-in Capital in Excess of Par ValuePreferred Stock for $250,000.

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Answers (1)

Know the Answer?

Sherlyn Cabrera · Answer 1

The answer is D.

Explanation:

Value of cash received is:

10,000 shares x $75

=$750,000

And that's a debit as it is shown in the question because cash was received.

Now the credit side.

Value of preferred stock is $50

So we have:

$50 x 10,000 shares

=$500,000 preferred shares.

Paid-in Capital in Excess of Par ValuePreferred Stock is $25 ($75 - $50)

So the value will be $25 x $10,000

=$250,000