Final answer:
The question involves the issuance of common stock by Collin Raye Corporation during its first year. The company issued 80,000 shares of no par stock, which would increase its cash and equity when sold. The example assumes a sale price of $5 per share for a total of $400,000.
Step-by-step explanation:
Issuance of Common Stock by Collin Raye Corporation
The subject of this question pertains to a transaction involving the issuance of common stock by Collin Raye Corporation. When a corporation issues its common stock, it receives cash or other assets and provides equity ownership to shareholders. In the absence of a par value, the stock is referred to as 'no par stock.' The transaction would be recorded by increasing (debiting) cash and increasing (crediting) common stock equity accounts by the proceeds received from the investors. It is important to know the price at which the stock was issued to calculate the total increase in cash and common stock equity.
To record the transaction, suppose Collin Raye Corporation issued the 80,000 shares at $5 per share. The journal entry on January 10 would be:
Debit Cash $400,000 (80,000 shares x $5 per share)
Credit Common Stock $400,000
This assumes that the entire 80,000 shares were sold at the same price and immediately upon issuance. Further clarification from the scenario, such as the presence of additional paid-in capital or a staggered payment schedule, would alter the accounting treatment.