Question

Computo began business on June 1, 2019. The corporate charter authorized issuance of 1,000 shares of no-par common stock and 4,000 shares of $6 par, 6% cumulative preferred stock. As of the beginning of 2020, 200 shares of common stock had been issued and none of the preferred stock had been issued. If the company issues 400 shares of common stock on March 1, 2020 for $10 per share, the journal entry would include a

Answer 1

d. $4,000 credit to common stock

Step-by-step explanation:

The journal entry is shown below:

Since the company issued 400 shares for $10 per share

So, the journal entry is

Cash Dr $4,000

To common stock $4,000

(Being the issuance of the common stock is recorded)

here the cash is debited as it increased the assets and credited the common stock as it also increased the equity account