Blossom Corporation issued 392 shares of $10 par value common stock and 128 shares of $50 par value preferred stock for a lump sum of $17,424. The common stock has a market price of $20 per share, and the preferred stock has a market price of $90 per share. Prepare the journal entry to record the issuance.

The joural entry to record the issuance of the shares is given below.

Explanation:

Fair Market Value:

392 * 20 = 7840  = 40.49%

128 * 90 =  11520  = 59.51%

                 19360

Lump Sum Amount:

Common Stock = $17,424 * 40.49% = 7055

Preferred Stock = $17,424 * 59.51% =  10369

Account Title                                                                     Dr              Cr

Cash                                                                                 17,424

Preferred stock (128 * 50)                                                                 6400

Additional paid-in capital-preferred                                                 3969

Common stock (392x $10)                                                                3920

Additional paid-in capital-common                                                   3135