Question

When no-par stock is issued, the entire proceeds are credited to Capital Stock and this amount is viewed as legal capital not subject to withdrawal. True or False True False

Answer 1

Answer:

True

Explanation:

If there is no-par stock is issued, the entire proceeds are credited to Capital Stock. Also, the amount we get in for this capital amount can not be legally withdrawn for any purposes. It also reduces any responsibility faced from payable by the issuance of no face value. The journal entry will be as follows:

Cash Debit

Common stock Credit