Abdulla Co. issues 4,000 shares of $90 par value preferred stock for cash at $100 per share. Choose the right journal entry related to the issuance of the preferred stock:

Multiple Choice

• cash $400,000 (debit), preferred stock $400,000 (credit)

• preferred stock $460,000 (debit), paid in capital $40,000 (debit), cash $500,000 (credit)

• cash $500,000 (debit), preferred stock $460,000 (credit), paid in capital $40,000 (credit)

• cash $400,000 (debit), preferred stock $360,000 (credit), paid in capital $40,000 (credit)