A company issues 1 million shares of common stock with a par value of $0.02 for $15 a share. The entry to record this transaction includes a debit to Cash for: A. $15,000,000 and a credit to Common Stock for $15,000,000. B. $20,000, a debit to Capital Receivable for $14,980,000, a credit to Common Stock for $20,000, and a credit to Additional Paid-in Capital for $14,980,000. C. $15,000,000, a credit to Common Stock for $20,000, and a credit to Additional Paid-in Capital for $14,980,000. D. $20,000 and a credit to Common Stock for $20,000.

Question

04-08-2021
Business

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A company issues 1 million shares of common stock with a par value of $0.02 for $15 a share. The entry to record this transaction includes a debit to Cash for: A. $15,000,000 and a credit to Common Stock for $15,000,000. B. $20,000, a debit to Capital Receivable for $14,980,000, a credit to Common Stock for $20,000, and a credit to Additional Paid-in Capital for $14,980,000. C. $15,000,000, a credit to Common Stock for $20,000, and a credit to Additional Paid-in Capital for $14,980,000. D. $20,000 and a credit to Common Stock for $20,000.

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anthougo anthougo · Answer 1 · 2021-08-11T12:32:07-04:00

The entry to record this transaction includes a debit to Cash for C. $15,000,000, a credit to Common Stock for $20,000, and a credit to Additional Paid-in Capital for $14,980,000.

For the cash received, the entry to record the transaction, Cash account is debited with $15,000,000 (1,000,000 x $15).

The Common Stock account is credited with $20,000 (1,000,000 x $0.02) to record the common stock value of the transaction.

And the Additional Paid-in Capital is credited with $14,980,000 (1,000,000 x $14.98) to record the additional capital contributed above the par value.

The $14.98 is the difference between the issue price ($15) per share and the par value ($0.02) per share.

The par value is the nominal amount that each share is issued.

Learn more about recording the issue of shares here: https://brainly.com/question/16378490

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