On September 1, Magliolo, Inc., (a) issues 18,000 shares of $10 par value preferred stock at $48 cash per share and (b) issues 120,000 shares of $2 par value common stock at $37 cash per share.

a. Using the financial statement effects template, illustrate the effects of these two issuances. Use negative signs with answers when appropriate. When applicable, enter total amount for contributed capital.

	Balance Sheet									Income Statement
Transaction	Cash Asset	+	Noncash Asset	=	Liabilities	+	Contrib. Capital	+	Earned Capital	Revenues	-	Expenses	=	Net Income
(a)	Answer	+	Answer	=	Answer	+	Answer	+	Answer	Answer	-	Answer	=	Answer
(b)	Answer	+	Answer	=	Answer	+	Answer	+	Answer	Answer	-	Answer	=	Answer

b. Prepare the journal entries for the two issuances.

General Journal
	Description	Debit	Credit
(a)	AnswerCashCommon stockAdditional paid-in capitalPreferred stock	Answer	Answer
	Preferred Stock	Answer	Answer
	AnswerCashCommon stockAdditional paid-in capitalPreferred stock	Answer	Answer
	To record issuance of preferred stock
(b)	AnswerCashCommon stockAdditional paid-in capitalPreferred stock	Answer	Answer
	Common stock	Answer	Answer
	AnswerCashCommon stockAdditional paid-in capitalPreferred stock	Answer	Answer
	To record issuance of common stock

c. Post the journal entries from b to the related T-accounts.

Cash (A)
(a)	Answer	Answer
(b)	Answer	Answer

Common Stock (SE)
(a)	Answer	Answer
(b)	Answer	Answer

Preferred Stock (SE)
(a)	Answer	Answer
(b)	Answer	Answer

Additional Paid-in Capital (SE)
(a)	Answer	Answer
(b)	Answer	Answer