Question

Niren, Inc.'s charter authorizes 1,000,000 shares of stock at a par value of $1 per share. Niren sells 100 shares of stock at its initial offering for $1 per share. The journal entry to record this transaction will include a_________.

Answer 1

Answer:

Dr Cash account 100

Cr Common Stock account 100

Explanation:

When a company sells stock they must record the value of the stock sold at par value in the common stock account. Any extra money received should go to the capital paid-in excess of par value account.

In this case, Niren sold 100 shares at par value ($1), so $100 should be recorded in the common stock account.