Respuesta :
Answer:
Cash $5,937,500
 To Common stock (125,000 shares × $0.01) $1,250
 To Additional paid in capital in excess of par value - Common stock  (125,000 shares × $12.49) $1,561,250
 To Preferred stock (125,000 shares × $30) $3,750,000
 To Additional paid in capital in excess of par value - Preferred stock (125,000 shares × $5) $625,000
(Being the issuance of the common stock and the preferred stock is recorded)
Explanation:
The journal entry is shown below:
Cash $5,937,500
 To Common stock (125,000 shares × $0.01) $1,250
 To Additional paid in capital in excess of par value - Common stock  (125,000 shares × $12.49) $1,561,250
 To Preferred stock (125,000 shares × $30) $3,750,000
 To Additional paid in capital in excess of par value - Preferred stock (125,000 shares × $5) $625,000
(Being the issuance of the common stock and the preferred stock is recorded)
For recording this we debited the cash as it increased the assets and the equity is also credited so the preferred stock and the common stock could be credited along with the additional paid in capital in excess of par
The journal entries to record the issuance of the stock by Donahue Corporation are as follows:
January 1, 2019 Debit Cash $45,500
Credit 7% Preferred Stock $39,000
Credit Additional Paid-in Capital - Preferred $6,500
- To record the issuance of 1,300 shares of $30 each at $35 per share.
Debit Cash $1,050,000
Credit Common Stock $840
Credit Additional Paid-in Capital - Common $1,049,160
- To record the issuance of 84,000 shares of $0.01 each at $12.50 per share.
Data Analysis and Calculations:
Authorized share capital:
2,000 shares, 7% Preferred Stock at $30 par
125,000 shares, Common Stock at $0.01 par
January 1, 2019 Cash $45,500 7% Preferred Stock $39,000 Additional Paid-in Capital - Preferred $6,500 1,300 shares of $30 each at $35 per share.
Cash $1,050,000 Common Stock $840 Additional Paid-in Capital - Common $1,049,160
84,000 shares of $0.01 each at $12.50 per share
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