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Intermediate Accounting: Reporting...
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Intermediate Accounting: Reporting...
Violet Corporation issues 1,200 shares of $150 par value preferred stock at a price of $200 per share. It attaches a warrant to each share of stock that allows the holder to purchase one share of $20 par common stock at $50 per share. Given that the portion of the proceeds attributable to the preferred stock totals $230,303 and the portion attributable to the common stock warrants totals $9,697, what journal entry would Violet make to allocate the $240,000 ($200 × 1,200) issuance price?
Prepare a journal entry to record the allocation of issue price.
Preferred stock: The stock that provides a fixed amount of return (dividend) to its stockholder before paying dividends to common stockholders is referred as preferred stock.
Prepare a journal entry to record the allocation of issue price:
| Account title and Explanation | Post Ref. |
Debit ($) |
Credit ($) |
| Cash | Â | $240,000 | Â |
| Â Â Â Â Preferred stock, $150 par | Â | Â | $180,000 |
|     Additional paid-in-capital on     preferred stock |  |  | $50,303 |
| Â ... |
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