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 accounts involved in the transaction.
- The company is selling its own stock, so the cash account (an asset) will be debited, and the capital stock account (an equity account) will be credited.
Step 2: Record the correct amounts for the transaction.
- The company sells 10,000 shares at the par value of $10 per share, resulting in a total cash inflow of $10,000 * $10 = $100,000.
Final Answer
The correct entry to record the transaction is: Debit cash $\$ 100,1$, credit capital stock $\$ 100,1$
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