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Homework answers / question archive / Moon Corporation
Moon Corporation. was organized on January 1, 2019. It is authorized to issue 100,000 shares of 9%, 5100 par value preference shares, and 1,000,000 shares of $4 par value of ordinary shares. The following transactions were occurred during the first year March 5. Issued 55,000 shares of preference shares for cash at $107 per share, The correct Journal entry on March 5 22 29 Cash 5,885,000 36 Shares Capital Preference Shares Premium Preference 385,000 5,500,000 Finnh Cash 5,885,000 Shares Capital Preference Shares Premium-Preference 5,500,000 385,000 5,885,000 Cashy Shares Capital Preference Shares Premium- Preference 5,000,000 185,000 5,885,000 Cash Shares Capital ordinary Shares Premium ordinary 3,500,000 385.000 Ne pode Previous page
Option B is correct i.e
Cash Dr. 5885000
To Share Capital -Preference A/c 5500000
To Shares Premium -Preference 385000
Because prefernce shares are issued at cash and as per double entry system cash a/c will be debited .
And sinse shares are being issued to shareholders they are credited, and sinse prefernce shares are at premium and to equalize double entry we will credit prremium on shares.
