Question

trane specialists, inc. reported the following stockholders equity on its balance sheet at june 30, 2025

requirement 1. identify the different classes of stock that trane specialists, inc. have outstanding
trane specialists, inc. have preferred stock and common stock outstanding
requirement 2. what is the par value per share of trane specialists, inc.s preferred stock?
the par value per share of preferred stock = $ 4
requirement 3. make two summary journal entries to record issuance of all the trane specialists, inc.s stock for cash. explanations are not required. (record debits first, then credits. exclude explanations from any journal entries.)
begin by recording the issuance of the preferred stock

partial balance sheet

stockholders equity

paid - in capital
preferred stock - 7%,? par value; 675,000 shares authorized, 375,000 shares issued and outstanding $ 1,500,000
common stock - $1 par value; 10,000,000 shares authorized, 1,420,000 shares issued and outstanding 1,420,000
paid - in capital in excess of par - common 2,700,000
total paid - in capital 5,620,000
retained earnings 11,800,000
total stockholders equity $ 17,420,000

Explanation:

Step 1: Record issuance of preferred stock

When preferred stock is issued, we debit Cash (as cash is received) and credit Preferred Stock (at par value).
The number of preferred shares issued is \(375,000\) and the total value of preferred stock is \(1,500,000\). So, par value per share of preferred stock \(=\frac{1,500,000}{375,000}=4\).
The journal entry for preferred stock issuance:

Date	Accounts	Debit	Credit
	Preferred Stock		\(1,500,000\)

Step 2: Record issuance of common stock

For common stock, we debit Cash (total cash received for common stock is \(1,420,000 + 2,700,000=4,120,000\)), credit Common Stock (at par value: \(1\times1,420,000 = 1,420,000\)) and credit Paid - in Capital in Excess of Par - Common (\(2,700,000\)).
The journal entry for common stock issuance:

Date	Accounts	Debit	Credit
	Common Stock		\(1,420,000\)
	Paid - in Capital in Excess of Par - Common		\(2,700,000\)

Answer:

For preferred stock issuance:

Date	Accounts	Debit	Credit
	Preferred Stock		\(1,500,000\)

For common stock issuance:

Date	Accounts	Debit	Credit
	Common Stock		\(1,420,000\)
	Paid - in Capital in Excess of Par - Common		\(2,700,000\)