Final answer:
The transaction increases the common stock account by $10,000 and additional paid-in capital by $40,000, resulting in a total equity increase of $50,000.
Step-by-step explanation:
The effect of the transaction where Daffy Duct Inc. issued 10,000 shares of $1 par value common stock at $5/share would result in an increase in both the common stock account and the additional paid-in capital account on the company's balance sheet.
The common stock account would be credited for $10,000 (10,000 shares x $1 par value). The additional paid-in capital would be credited for the excess amount over the par value, which is $40,000 (10,000 shares x ($5 - $1)). Therefore, the total equity of the company would increase by $50,000, which is the amount received from the investors for the issued shares.
When Daffy Duct Inc. issued 10,000 shares of $1 par value common stock at $5/share, it affected the company's equity and cash. The company received cash of $50,000 ($5/share x 10,000 shares), which increased the cash asset. Additionally, the common stock account on the balance sheet increased by $10,000 ($1 par value x 10,000 shares).