Question

Roxy Inc. issued 3,000 shares of no-par common stock with a stated value of $5 per share. The market price of the stock on the date of issuance was $14 per share. The entry to record this transaction includes a

Answer 1

Answer and Explanation:

The journal entry to record the issuance of the common stock is shown below;

Cash Dr (3,000 shares × $14) $52,000

  To Common stock (3,000 shares × $5) $15,000

  To Additional paid in capital $27,000

(being the issuance of the common stock is recorded)

Here the cash is debited as it increased the asset and credited the common stock & additional paid in capital as it also increased the equity