A company issues 1 million shares of preferred shares with a price of $26 per share.The issuance should be recorded as:
A)a debit to Cash of $26 million and a credit to Preferred Shares of $26 million.
B)a debit to preferred shares of $26 million and a credit to cash of $26 million.
C)a debit to Cash of $24 million,a debit to Treasury Shares of $2 million,and a credit to Preferred Shares of $26 million.
D)a debit to Cash of $26 million,a credit to Preferred Shares of $2 million,and a credit to Additional Paid-in Capital of $24 million.

Question

Quizplus · Accepted Answer

The correct recording of the issuance of 1 million preferred shares at $26 per share is a debit to Cash for $26 million (reflecting the inflow of cash from the issuance) and a credit to Preferred Shares for $26 million (reflecting the increase in equity from the issuance).

A Company Issues 1 Million Shares of Preferred Shares with a Price