Step-by-step explanation:
The issuance of 1,000 shares of $1 par value common stock for $20 per share would have the following effect on the balance sheet:
Increase in Cash: The company would receive $20,000 in cash from the sale of the shares, which would increase the cash balance on the balance sheet.
Increase in Common Stock: The par value of the shares is $1, so the company would record an increase in common stock of $1,000 (1,000 shares x $1 par value per share) on the balance sheet.
Increase in Additional Paid-In Capital: The difference between the sale price of the shares and their par value represents additional paid-in capital. In this case, the company would record an increase in additional paid-in capital of $19,000 (1,000 shares x ($20 sale price per share - $1 par value per share)) on the balance sheet.
Therefore, the balance sheet would reflect an increase in cash of $20,000, an increase in common stock of $1,000, and an increase in additional paid-in capital of $19,000, with the total equity of the company increasing by $20,000