Poole Company began business on January 1, 2016.The corporate charter authorized issuance of 5,000 shares of $1 par value common stock, and 4,000 shares of $8 par value, 6% cumulative preferred stock.None of the preferred shares were issued.On July 1, Poole issued 1,000 shares of common stock in exchange for two years rent on a retail location.The cash rental price is $2,400 per month and the rental period begins on July 1.The correct entry to record the July 1 transaction will

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The transaction represents a non-cash exchange where rent was paid in the form of common stock. As a result, Prepaid Rent is increased by the fair value of the rent, $57,600, and Common Stock is increased by the number of shares issued, 1,000, at par value, $1 per share. The difference between the fair value of the rent and the par value of the common stock, $56,600, represents Additional Paid-in Capital-Common.

Poole Company Began Business on January 1, 2016