Ross Island Co

Multiple Choice

Ross Island Co.issues 10,000 shares of no-par value preferred stock for cash at $120 per share.The journal entry to record the transaction will consist of a debit to Cash for $1,200,000 and a credit (or credits) to:

A) Preferred Stock for $1,200,000.
B) Preferred Stock for $40,000 and Additional Paid-in Capital for $1,160,000.
C) Preferred Stock for $40,000 and Retained Earnings for $1,160,000.
D) Retained Earnings for $1,200,000.