Use the Following Information to Answer the Question Below $\$ 20$

Multiple Choice

Use the following information to answer the question below. The following transactions involving Lupine Corporation occurred during the year:
Apr. 1 Purchased 2,000 shares of its own preferred stock for $\$ 20$ , the current market price. This is the first transaction involving its own stock engaged in by the company.

May 3 Sold 400 of the shares purchased on April 1 for $25 per share.
June 5 Retired 600 of the shares purchased on April 1. The original issue price was $\$ 10$ . The par value of the stock is $\$ 5$ .
The entry to record the April 1 transaction would be:

A)
$\begin{array}{llr} \text {Cash } &40,000\\ \text { Treasury Stock, Preferred } &&40,000\\\end{array}$

B)
$\begin{array}{l}\text { Retained Earnings }&40,000 \\\text { Cash }&&40,000\end{array}$

C)
$\begin{array}{llr} \text { Paid-in Capital, Preferred } & 40,000\\ \text { Treasury Stock, Preferred } & & 40,000\\\end{array}$

D)
$\begin{array}{l}\text { Treasury Stock, Preferred } &40,000\\\text { Cash }&&40,000\end{array}$