Question

Daffy Duct, Inc. issued 10,000 shares of $1 par value common stock at $10 per share. The journal entry to record this transaction includes a ______.

A) 90,000 credit to additional paid in capital
B) 100,000 debit to cash
C) 10,000 credit to common stock

Answer 1

All of the above.

Step-by-step explanation:

As for the details provided,

When shares are issued at a price more than the par value, then the difference between the issue price and par value is credited to the additional paid in capital account.

= ($10 - $1)
`*` 10,000 = $90,000

Further, the cash account is debited as it is increased with the total amount received that is issue price.

= $10
`*` 10,000 = $100,000

Also, the par value of common equity is credited in the common stock as that is the value belonging to share, other than additional capital.

= $1
`*` 10,000 = $10,000