Question

On March 10, Blarney Corporation issued for cash 10,000 shares of no-par common stock at $40. The journal entry to record this transaction would include a

A) debit to Cash for $10,000.

B) credit to Cash for $400,000.

C) credit to Common Stock for $400,000.

D) credit to Common Stock for $100,000.

Answer 1

The correct journal entry for Blarney Corporation's issuance of 10,000 shares of no-par common stock at $40 each is a debit to Cash for $400,000 and a credit to Common Stock for $400,000.

Step-by-step explanation:

The question asks which journal entry would be made to record the issuance of no-par common stock for cash by Blarney Corporation, which sold 10,000 shares at $40 each. The correct journal entry would include a debit to Cash for the total amount received ($400,000) and a credit to Common Stock for the same amount, as this represents the increase in equity from the issuance of the stock.

Therefore, the correct answer would be: a debit to Cash for $400,000 and a credit to Common Stock for $400,000. No-par stock means that the stock has not been assigned a par value, so its credit value in the entry is the total amount of cash received from the issuance.