The Nelson Corporation issues 6,000 shares of $100 par preferred

The Nelson Corporation issues 6,000 shares of $100 par preferred stock at a price of $112 per share. A stock warrant is attached to each share of preferred stock that enables the holder to purchase one share of $10 par common stock for $25. Immediately after issuance, the preferred stock begins selling ex rights for $110 per share. The warrants (which expire in 30 days) also begin trading for $4 per warrant.

Required

1. Prepare the journal entry to record the sale of the preferred stock.

2. Prepare the journal entry to record the issuance of 5,000 shares of common stock in exchange for 5,000 warrants and $25 per share.

3. Prepare the journal entry to record the expiration of 1,000 warrants.


Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...

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