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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.

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Answer:

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

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