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4 May, 23:14

Dynatech issues 1,000 shares of $10 par value common stock at $12 per share. When the transaction is recorded, which accounts are credited? Common Stock $12,000 Common Stock $10,000 and Paid-in Capital in Excess of Par Value $2,000 Common Stock $10,000 and Gain on Stock Sale $2,000 Common Stock $10,000 and Retained Earnings $2,000

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  1. 4 May, 23:25
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    Common Stock $10,000 and Paid-in Capital in Excess of Par Value $2,000

    Explanation:

    The journal entry to record the issuance of common stock is presented below:

    Cash A/c Dr $12,000 (1,000 shares * $12)

    To Common Stock $10,000 ($1,000- * $10)

    To Additional Paid-in Capital in excess of par - Common Stock $2,000

    (Being the issuance of stock is reported and the remaining balance i. e $2,000 is credited to the additional paid-in capital account)

    While issuing the stock, we debited the cash account as there is a cash inflow and credited the common stock and additional paid-in capital account as the share is issued which affect the stockholder equity
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