A Company Issues 100,000 Shares of Preferred Stock for $40

Multiple Choice

A company issues 100,000 shares of preferred stock for $40 a share.The stock has a fixed dividend rate of 5% and a par value of $3 per share.The company records the issuance with a:

A) debit of $4 million to Cash and a credit of $4 million to Preferred Stock.
B) debit of $300,000 to Cash and a credit of $300,000 to Preferred Stock.
C) debit of $4 million to Cash,a credit of $300,000 to Preferred Stock,and a credit of $3.7 million to Additional Paid-in Capital.
D) debit of $300,000 to Cash,a debit of $3.7 million to Long-term Investments,a credit of $300,000 to Preferred Stock,and a credit of $3.7 million to Additional Paid-in Capital.