Fonthouse Corporation issues 10,000 shares of no-par preferred stock for cash at $60 per share. The effects of the transaction described will be reported on the balance sheet in the:
A)liabilities section.
B)retained earnings account.
C)preferred shares account.
D)common shares account.

Question

Quizplus · Accepted Answer

The effects of issuing preferred stock for cash will be reported in the preferred shares account, which is part of the equity section of the balance sheet. This transaction does not affect liabilities or retained earnings, and it is not related to the common shares account.

Fonthouse Corporation Issues 10,000 Shares of No-Par Preferred Stock for Cash