Rowlands Corporation has 100,000 shares of $40 par value preferred stock authorized. During the year, it had the following transactions related to its preferred stock. (a) Issued 20,000 shares at $55 per share. (b) Issued 10,000 shares for equipment having a $700,000 asking price. The stock had a market value of $75 per share. Journalize the transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit (a) Cash 4,000,000 1,100,000 (b)
Rowlands Corporation has 100,000 shares of $40 par value preferred stock authorized. During the year, it had the following transactions related to its preferred stock. (a) Issued 20,000 shares at $55 per share. (b) Issued 10,000 shares for equipment having a $700,000 asking price. The stock had a market value of $75 per share. Journalize the transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit (a) Cash 4,000,000 1,100,000 (b)
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Rowlands Corporation has 100,000 shares of $40 par value preferred stock authorized. During the year, it had the following
transactions related to its preferred stock.
(a)
Issued 20,000 shares at $55 per share.
(b)
Issued 10,000 shares for equipment having a $700,000 asking price. The stock had a market value of $75 per share.
Journalize the transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
No. Account Titles and Explanation
Debit
Credit
(a)
Cash
4,000,000
1,100,000
(b)
Expert Solution
Step 1
Preferred stock: These are the shares which has a preference over common stock holders in the dividend payment at a fixed rate every year and also in the payment of proceeds in the event of liquidation. The preferred stock can be cumulative or non-cumulative. Cumulative preferred stock is a type of stock where in the dividends if not paid for a particular year will accumulate as arrears and need to be paid in the future years where as no dividend accumulate in case of non-cumulative preferred stock
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