Question

Exercise 11-5 (Part Level Submission) Hodge Corporation issued 117,000 shares of $19 par value, cumulative, 7% preferred stock on January 1, 2016, for $2,530,000. In December 2018, Hodge declared its first dividend of $840,000. Collapse question part (a) Prepare Hodge’s journal entry to record the issuance of the preferred stock.

Answer 1

Step-by-step explanation:

The journal entry is shown below:

Cash A/c Dr $2,530,000

To Preferred stock $2,223,000 (117,000 shares × $19)

To Additional Paid-in-Capital $307,000

(Being the preferred stock is issued for cash)

And, the remaining amount will be credited to Additional Paid-in-Capital i.e $2,530,000 - $2,223,000 = $307,000