On 1 December a company issues preference shares and ordinary shares for cash in the ratio of 4:6. The preference shares are priced at $6 while the ordinary shares are priced at $3. The company had 5 000 000 shares outstanding on 29 November and 6 500 000 shares outstanding on 2 December.

Of the following, which should appear in the journal entry?

Dr Cash $6 500 000

Cr Ordinary shares $2 700 000

Cr Preference shares $3 500 000

Dr Cash $1 500 000