Druffle Industries issues 5,000 shares of $100 par, 7% noncumulative, nonparticipating preferred stock at par. The correct journal entry to record this stock issue is:
A)Debit Cash $35,000; credit Preferred Stock $35,000.
B)Debit Preferred Stock $35,000; credit Cash $35,000.
C)Debit Cash $535,000; credit Preferred Stock $500,000; credit Paid-in Capital in Excess of Par Value, Preferred Stock $35,000.
D)Debit Cash $535,000; credit Preferred Stock $535,000.
E)Debit Cash $500,000; credit Preferred Stock $500,000.

Question

Quizplus · Accepted Answer

The company issues 5,000 shares at $100 par value, so the cash received is $500,000, and the Preferred Stock account is credited for the same amount.

Druffle Industries Issues 5,000 Shares of $100 Par, 7% Noncumulative