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?
Solution Of Multiple Choice Question (MCQ) The correct option is “C”, as when the company / corporation sells / issues 10,000 shares of authorized stock at par value of $10 per share, then the company gets cash in exchange of shares sold in the market. So, 10,000 shares sold to investors at the par value of $10 each share yield the price of $100,000 (10,000 Shares X $10 Par Value). The journal entry to record for this Transaction is shown below: Cash a/c $100,000 Capital Stock a/c $100,000 (10,000 Shares Sold To Investors At Par Value Of $10 Each Share) Note: Authorized Stock Is Just Shown In The Balance Sheet As It Just Shows The Total Numbers Of Shares Within Which The Shares Sells To Shareholders / Stockholders. As the company received cash in selling the shares, so there is cash inflows, so we debit cash account as it is increasing. Capital Stock is also