Question

Recording the Sale of Common and Preferred Stock At the end of its first year of operations, Mulligan Corporation has outstanding shares of 116,000 common stock and 18,000 preferred stock. The State of Ohio authorized Mulligan to issue 19,000 shares of 6% preferred stock with a par value of $35 per share and 117,000 shares of common stock with a par value of $6 per share. Any preferred stock sold during the year had a selling price of $45.50 per share. Mulligan's common stock was issued at $20.

Answer 1

Answer:

the journal entries to record these transactions are:

to record issuance of common stocks

Dr Cash 2,340,000

    Cr Common stocks 702,000

    Cr Additional paid in capital, common stocks 1,638,000

to record the issuance of preferred stocks

Dr Cash 864,500

    Cr Preferred stocks 665,000

    Cr Additional paid in capital, preferred stocks 199,500