Mercury Corporation issued 8,500 shares of no-par common stock for $10 per share. Mercury also issued 2,800 shares of $55 par, 6 percent noncumulative preferred stock at $65 per share. Required a. Record these events in a horizontal statements model. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Use NA to indicate that an element was not affected by the event.

Balance Sheet

Income Statement

Event

Assets

=

Stockholders Equity

Revenue

Expense

=

Net Income

Cash Flow

Cash

=

Preferred Stock

+

Common Stock

+

PIC in Excess

=

1 - Issue of CS

=

+

+

=

2 - Issue of PS

=

+

+

=

b. Prepare journal entries to record these transactions.

Event	General Journal	Debit	Credit
1

Record the issue of preferred stock.

Event	General Journal	Debit	Credit
2