Final answer:
The issuance of 2 million shares of preferred stock by Columbia Clay, Inc. at $26 per share results in a cash inflow of $52 million, which should be recorded as a debit to Cash.
Step-by-step explanation:
The question is about recording the issuance of preferred stock by Columbia Clay, Inc. on a company's financial statements. When a company issues preferred stock,
it receives cash from investors. In this case, the company issues 2 million shares with a market price of $26 per share. The amount of cash received would be the number of shares multiplied by the market price per share, resulting in a total of $52 million.
Therefore, the correct entry would require a debit to Cash for $52 million, reflecting the inflow of cash into the company from the issuance of the stock.
The issuance should be recorded with a debit to Cash for $4 million.