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 r...

d Prepaid rent 72000 Common stock 20000 Additional paidin capital ...

Thornwood Partners began business on January 1, 2011. The corporate charter authorized issuance of 75,000 shares of

Question:

Thornwood Partners began business on January 1, 2011. The corporate charter authorized issuance of 75,000 shares of $1 common stock, and 8,000 shares of $3 10 percent cumulative preferred stock. On July 1, Thornwood issued 20,000 shares of 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
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...