Use the Following Information to Answer the Question Below $\$ 20$

question 20

Multiple Choice

Use the following information to answer the question below. The following transactions involving Lupine Corporation occurred during the year:
Apr. 1 Purchased 2,000 shares of its own preferred stock for $\$ 20$ , the current market price. This is the first transaction involving its own stock engaged in by the company.

May 3 Sold 400 of the shares purchased on April 1 for \$25 per share.

June 5 Retired 600 of the shares purchased on April 1. The original issue price was $\$ 10$ . The par value of the stock is $\$ 5$ .

The entry to record the April 1 transaction would be:

• A)
• \(\begin{array}{l}
• \text { Cash } & 40,000\\
• \text { Treasury Stock, Preferred }&& 40,000
• \end{array}\)
• B)
• \(\begin{array}{l}
• \text { Retained Earnings }&40,000 \\
• \text { Cash }&&40,000
• \end{array}\)
• C)
• \(\begin{array}{llr}
• \text { Paid-in Capital, Preferred} &40,000 \\
• \text { Treasury Stock, Preferred } &&40,000\\
• \end{array}\)
• D)
• \(\begin{array}{l}
• \text {Treasury Stock, Preferred } & 40,000\\
• \text { Cash}&& 40,000
• \end{array}\)

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