QQuestionAnatomy and Physiology
QuestionAnatomy and Physiology
A company sells 10,000 shares of previously authorized stock at the par value of $\$ 1$ per share.
# What's the correct entry to record the transaction?
Debit cash $\$ 1$, credit capital stock $\$ 1$
Debit cash $\$ 100,1$, credit capital stock $\$ 100,1$
Debit cash $\$ 10,1$, credit capital stock $\$ 10,1$
Debit cash $\$ 100,1$, credit treasury stock $\$ 100,1$
Debit capital stock $\$ 100,1$, credit cash $\$ 100,1$
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Answer
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Step 1: Identify the correct account to debit and credit
The company is selling its own stock, which increases the amount in the Capital Stock account. The cash account will also be affected, as the company is receiving money for the sale of its stock.
Step 2: Record the correct amounts
The company sells 10,000 shares at the par value of $10 per share, so the total cash received is $10,000 * $10 = $100,000.
Final Answer
Debit cash \$ 100,000, credit capital stock \$ 100,000
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