Question

The entry to record the issuance of 100,000 shares of $0.10 par value common stock for $10 per share is debit ________

A. cash for $1,000,000 and credit common stock for $10,000 and additional paid-in capital for $990,000
B. cash for $1,000,000 and credit common stock for $990,000 and treasury stock for $10,000
C. cash and credit common stock for $10,000 cash and credit common stock for $1,000,000
D. Cash for $1,000,000 and credit common stock for $990,000 and additional paid-in capital for $10,000

Answer 1

The entry to record the issuance of 100,000 shares of $0.10 par value common stock for $10 per share is debit Cash for $1,000,000 and credit common stock for $990,000 and additional paid-in capital for $10,000.

Step-by-step explanation:

The entry to record the issuance of 100,000 shares of $0.10 par value common stock for $10 per share is as follows:

1. Debit Cash for $1,000,000
2. Credit Common Stock for $990,000
3. Credit Additional Paid-in Capital for $10,000

When a company issues common stock, it receives cash from investors. The entry debits the Cash account for the total amount received and credits both Common Stock and Additional Paid-in Capital accounts. The common stock account is credited for the par value of the shares issued, which is $0.10 multiplied by the number of shares (100,000 shares in this case). The remaining amount is credited to the Additional Paid-in Capital account.