Question

Ace Co. issued 1,000 shares of its $10 par value common stock for $15 per share in cash. How should this transaction be reported in Ace's statement of cash flows for the year of issuance

Answer 1

Answer:

$15,000 cash inflow from financing activities

Explanation:

Financing operations: it records operations concerning long-term debt and equity balance of shareholders. The issuance of the shares is an inflow of cash while other redemption and dividend are an outflow of cash

Since 1,000 shares are issued at $10 par value for $15 per cash

Here we record the $15,000 as cash inflows as this represents that the capital introduced in the business and the same is to be considered