Abilene Western Shop began business on January 1, 2015.The corporate charter authorized issuance of 10,000 shares of $2 par value common stock and 4,000 shares of $8 par value, 6% cumulative preferred stock.Abilene issued 2,400 shares of common stock for cash at $20 per share on January 2, 2015.What effect does the entry to record the issuance of stock have on total stockholders' equity?

Question

Quizplus · Accepted Answer

The issuance of 2,400 shares of common stock at $20 per share results in an increase in total stockholders' equity. The total amount received is $48,000 (2,400 shares × $20 per share), which is added to the common stock account. The issuance of preferred stock is not mentioned in this scenario. Therefore, the correct answer is C.

Abilene Western Shop Began Business on January 1, 2015