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22 November, 00:44

If a company issues 2,500 shares of common stock at a market price of $48 per share, which of the following is the correct balance sheet effect? A. Increase cash by $120,000 and increase contributed capital by $120,000 B. Increase cash by $120,000 and increase earned capital by $120,000 C. Increase stock revenues by $120,000 D. Stock issuances are not reported on the balance sheet E. None of the above

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  1. 22 November, 01:03
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    A. Increase cash by $120,000 and increase contributed capital by $120,000

    Explanation:

    when a company issues common stock then the company's cash balance and shareholders fund increases.

    in this case, the company issued 2,500 shares of common stock at price $48;

    The effect increase cash = 2,500*48

    = $120,000

    The effect increase contributed capital = 2,500*48

    = $120,000

    Therefore, The the correct balance sheet effect is, increase cash by $120,000 and increase contributed capital by $120,000.
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Home » Business » If a company issues 2,500 shares of common stock at a market price of $48 per share, which of the following is the correct balance sheet effect? A. Increase cash by $120,000 and increase contributed capital by $120,000 B.
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