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

question 129

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

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