New Corp. issues 2,000 ordinary shares with a $10 par value at $16 per share. When the transaction is recorded, credits are made to

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The total amount received from issuing the shares is $16 x 2,000 = $32,000. The par value of the shares, which is $10 x 2,000 = $20,000, will be credited to the Share Capital-Ordinary account. The difference between the total amount received and the par value, which is $32,000 - $20,000 = $12,000, will be credited to the Share Premium-Ordinary account. Therefore, the correct entry to record the transaction is a credit to Share Capital-Ordinary for $20,000 and a credit to Share Premium-Ordinary for $12,000.

New Corp Issues 2,000 Ordinary Shares with a $10 Par Value