The following transactions involving Cactus Wren 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 is : 

A. Cash                              40,000
     Treasury Stock, Preferred                            40,000

B. Retained Earnings                  40,000
     Cash                                                                 40,000

C. Paid-in Capital, Preferred            40,000
     Treasury Stock, Preferred                             40,000

D. Treasury Stock, Preferred            40,000
     Cash                                                                   40,000

Answer rating: 100% (QA)

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