Question

Fronthouse Corp. issues 10,000 shares of no-par value preferred stock for cash at $60 per share. The journal entry to record the transaction will consist of a debit to Cash for $600,000 and a credit (or credits) to:__________.
Preferred Stock for $20,000 and Retained Earnings for $580,000.
Retained Earnings for $600,000.
Preferred Stock for $20,000 and Additional Paid-in Capital for $580,000.
Preferred Stock for $600,000.

Answer 1

Answer:

Preferred Stock for $20,000 and Retained Earnings for $580,000

Or

Retained Earnings for $600,000

Or

Preferred Stock for $600,000

Explanation:

Based on the information given we were told that they issues 10,000 shares of no-par value preferred stock for cash at the amount of $60 per share which means that the journal entry to record the transaction will consist of a debit to Cash for the amount of $600,000 and a credit (or credits) to:

Preferred Stock for $20,000 and Retained Earnings for $580,000.

Or

Retained Earnings for $600,000

(10,000 shares*$60 per share )

Or

Preferred Stock for $600,000

(10,000 shares*$60 per share )