Question

Martinez Corp. is authorized to issue both preferred and common stock. The par value of the preferred is $50. During the first year of operations, the company had the following events and transactions pertaining to its preferred stock. Feb. 1 Issued 42,500 shares for cash at $53 per share. July 1 Issued 61,500 shares for cash at $56 per share.

Journalize the transactions. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit choose a transaction date Feb. 1July 1 enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount choose a transaction date Feb. 1July 1 enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount

Post to the stockholders’ equity accounts. (Use T-accounts.) (Post entries in the order of journal entries posted in the previous part.) Preferred Stock choose a transaction date 2/17/1 enter a debit amount choose a transaction date 2/17/1 enter a credit amount choose a transaction date 2/17/1 enter a debit amount choose a transaction date 2/17/1 enter a credit amount choose the end date of the accounting period Bal. enter a debit balance choose the end date of the accounting period Bal. enter a credit balance Paid-in Capital in Excess of Par Value—Preferred Stock choose a transaction date 2/17/1 enter a debit amount choose a transaction date 2/17/1 enter a credit amount choose a transaction date 2/17/1 enter a debit amount choose a transaction date 2/17/1 enter a credit amount choose the end date of the accounting period Bal. enter a debit balance choose the end date of the accounting period Bal. enter a credit balance Click if you would like to Show Work for this question: Open Show Work

Answer 1

ANSWER.

IF AN CORPORATION RECEIVES MORE THAN THE PAR VALUE , THE AMOUNT IN EXCESS OF PAR VALUE WILL BE RECORDED IN ANOTHER ACCOUNT NAMED AS PAID-IN CAPITAL IN EXCESS OF PAR-PREFFERED STOCK.

JOURNAL ENTRY FOR THE ISSUANCE OF PREFERRED STOCK ON FEB 01:

Date	Account titles and explanations	Debit	credit
Feb 01	Cash	$ 2,252,500	-
-	Preferred stock $ 50 par value	-	$ 2,125,000
-	Paid-in Capital in Excess of Par Value—Preferred Stock	-	$ 127,500

CASH RECEIVED WILL BE $ 2,252,000 ( $ 53 PER SHARE RECEIVED ON 42,500 SHARES).

JOURNAL ENTRY FOR THE ISSUANCE OF PREFERRED STOCK ON JULY 01:

Date	Account titles and explanations	Debit	credit
July 01	Cash	$ 3,444,000	-
-	Preferred stock $ 50 par value	-	$ 3,075,000
-	Paid-in Capital in Excess of Par Value—Preferred Stock	-	$ 369,000

CASH RECEIVED WILL BE $ 3,444,000 ( $ 56 PER SHARE RECEIVED ON 61,500 SHARES).

T- ACCOUNTS FOR

1. PREFERRED STOCK:

Date	Amount	Date	Amount
-	$ 127,500	Feb 01	$ 2,125,000
-	$ 369,000	July 07	$ 3,075,000
Dec 31 (balance)	$ 5,200,000	-	-
total	= $5,200,000	total	= $5,200,000

*SINCE CLOSING DATE IS NOT GIVEN. I AM ASSUMING IT AS DECEMBER 31ST .

2. PAID-IN CAPITAL IN EXCESS OF PAR VALUE-PREFERRED STOCK:

Date	Amount	Date	Amount
-	-	Feb 01	$ 127,500
-	-	July 07	$ 369,000
Dec 31 (balance)	$ 496,500	-	-
total	= $496,500	total	= $496,500