Final answer:
The correct journal entry for the issuance of stock includes a debit to Cash for the total cash received and credits to Common Stock for the par value multiplied by the number of shares, with any excess credited to Additional Paid-In Capital.
Step-by-step explanation:
The journal entry to record the issuance of 5,000 shares of $2 par value common stock for cash at $5 per share would include a debit to Cash for $25,000 because 5,000 shares at $5 per share results in $25,000 in cash received. It would also include a credit to Common Stock for $10,000, calculated as 5,000 shares at the $2 par value per share, and a credit to Additional Paid-In Capital for $15,000, which represents the excess of cash received ($25,000) over the par value amount credited to Common Stock ($10,000).
Therefore, the correct answer is c. A debit to Cash for $25,000. The other options, such as a debit to Retained Earnings or a credit to Gain on Issue of Common Stock, are not applicable in this case since Retained Earnings is not affected by the issuance of stock, and gains are not recognized in equity transactions when issuing common stock. Option d. A credit to Common Stock for $25,000 is incorrect because the credit to Common Stock is for the par value amount, not the full cash received.