(SOLVED) A company sells 10,000 shares of previously authorized stock at the par value of $10 per share. What's the correct entry to record the transaction?
Discipline: Accounting
Type of Paper: Question-Answer
Academic Level: Undergrad. (yrs 3-4)
Paper Format: APA
Question
A company sells 10,000 shares of previously authorized stock at the par value of $10 per share. What's the correct entry to record the transaction? Debit cash $10, credit capital stock $10 Debit cash $100,000, credit capital stock $100,000 Debit cash $10,000, credit capital stock $10,000 Debit cash $100,000, credit treasury stock $100,000 Debit capital stock $100,000, credit cash $100,000
Expert Answer
Answer: debit cash $100,000 and credit capital stock $100,000.
If the company sells the common stock at the price of its par value or stated value, it can make the journal entry by debiting the cash account and crediting the common stock account.