In Its First Year of Operations Banner Elk Corporation Had $\quad$

question 62

Essay

In its first year of operations Banner Elk Corporation had the following transactions pertaining to its $10 par value preferred stock. Feb. 1 $\quad$ Issued 6,000 shares for cash at $\$ 43$ per share.
Nov. 1 $\quad$ Issued 3,000 shares for cash at $\$ 45$ per share.
Instructions
(a) Journalize the transactions.
(b) Indicate the amount to be reported for (1) preferred stock and (2) paid-in capital in excess of par - preferred stock at the end of the year.

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Definitions:

Precautionary Motive

A theory explaining the demand for liquidity by individuals and firms as a safeguard against future cash needs and uncertainties.

Safety Margin

The difference between the actual value of a company's sales and the break-even sales, serving as a buffer for unexpected declines in revenue.

Financial Reserve

A portion of funds set aside by a business or organization to cover future obligations or unexpected expenses.

Zero-balance Accounts

Bank accounts that are maintained at a zero balance by automatically transferring funds from a master account in amounts only large enough to cover presented checks or debits.