If shares of preferred stock are sold at par value for cash, the transaction would be entered by:

Question

Quizplus · Accepted Answer

When shares of preferred stock are sold at par value for cash, the transaction would result in an increase in cash and an increase in the preferred stock account. Therefore, the transaction would be recorded by debiting Cash and crediting Preferred Stock. Choices B, C, and D are incorrect because they either do not record the increase in cash or do not reflect the fact that the shares were sold at par value.

If Shares of Preferred Stock Are Sold at Par Value