The Nelson Corporation issues 6,000 shares of $100 par preferred stock at a price of $112 per

Question:

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
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