A company issues 1 million shares of preferred stock with a par value of $2 at its market price of $26 per share.The issuance should be recorded with a debit to Cash for:
A) $26 million and a credit to Preferred Stock for $26 million.
B) $2 million and a credit to Preferred Stock for $2 million.
C) $26 million, a credit to Additional Paid-in Capital for $2 million, and a credit to Preferred Stock for $24 million.
D) $26 million, a credit to Preferred Stock for $2 million, and a credit to Additional Paid-in Capital for $24 million.

Question

Quizplus · Accepted Answer

The issuance should be recorded with a debit to Cash for $26 million, a credit to Preferred Stock for the par value of $2 million, and a credit to Additional Paid-in Capital for the excess amount of $24 million.

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