Question

Thornwood Partners began business on January 1, 2011. The corporate charter authorized issuance of 75,000 shares of $1 par value common stock, and 8,000 shares of $3 par value, 10 percent cumulative preferred stock. On July 1, Thornwood issued 20,000 shares of common stock in exchange for two years rent on a retail location. The cash rental price is $3,000 per month and the rental period begins on July 1. What is the correct entry to record the July 1 transaction?
a. Debit to Cash, $72,000; Credit to Prepaid Rent, $57,600
b. Debit to Prepaid Rent, $72,000; Credit to Common Stock, $72,000
c. Debit to Prepaid Rent, $72,000; Credit to Common Stock, $60,000; Credit to Additional Paid-In Capital—Common Stock, $12,000
d. Debit to Prepaid Rent, $72,000; Credit to Common Stock, $20,000; Credit to Additional Paid-In Capital—Common Stock, $52,000


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  • CreatedSeptember 22, 2015
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