A Company Issues 1 Million Shares of Preferred Stock with a Par

question 142

Multiple Choice

A company issues 1 million shares of preferred stock with a par value of $2 and a market price of $26 per share.The issuance should be recorded as:

• A)a debit to Cash of $26 million and a credit to Preferred Stock of $26 million.
• B)a debit to Cash of $2 million and a credit to Preferred Stock of $2 million.
• C)a debit to Cash of $26 million,a credit to Additional Paid-in Capital of $2 million,and a credit to Preferred Stock of $24 million.
• D)a debit to Cash of $26 million,a credit to Preferred Stock of $2 million,and a credit to Additional Paid-in Capital of $24 million.

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Definitions:

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