Logan Corporation Issues 50,000 Shares of $50 Par Value Preferred

question 33

Multiple Choice

Logan Corporation issues 50,000 shares of $50 par value preferred stock for cash at $60 per share. The entry to record the transaction will consist of a debit to Cash for $3,000,000 and a credit or credits to

• A) Preferred Stock for $3,000,000.
• B) Preferred Stock for $2,500,000 and Paid-in Capital in Excess of Par Value-Preferred Stock for $500,000.
• C) Preferred Stock for $2,500,000 and Retained Earnings for $500,000.
• D) Paid-in Capital from Preferred Stock for $3,000,000.

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Definitions:

Expected Return

The weighted average of all possible returns from an investment, where each return is weighted by its probability of occurring.

Real Estate Project

An initiative involving the purchase, improvement, management, or sale of property assets for the purpose of generating profits or revenue.

Risk-Free Asset

An investment that is expected to return its original value without any loss, theoretically free from default risk.

MRS

Marginal Rate of Substitution, the rate at which a consumer can give up some amount of one good in exchange for another good while maintaining the same level of utility.