The 12/31/2018 balance sheet of Despot Inc. included the following: In January 2018, Despot recorded a transaction with this journal entry:
- The transaction was for the:
A) Issue of 2 million shares of common stock at par.
B) Issue of common stock for $150 million in cash.
C) Receipt of $20 per share for a new stock issue.
D) All of these answer choices are correct.

Question

The 12/31/2018 balance sheet of Despot Inc. included the following:  In January 2018, Despot recorded a transaction with this journal entry: 
- The transaction was for the:
A) Issue of 2 million shares of common stock at par. 
B) Issue of common stock for $150 million in cash. 
C) Receipt of $20 per share for a new stock issue. 
D) All of these answer choices are correct.

Quizplus · Accepted Answer

The journal entry records the issuance of common stock for $150 million in cash, indicating that Despot Inc. raised funds by issuing new shares to investors. Option A is incorrect because the journal entry does not mention the par value of the issued shares, only the cash received. Option C is also incorrect because the entry does not record a per-share amount, only the total amount received for the issuance. Option D is incorrect because only option B is supported by the given information.

The 12/31/2018 Balance Sheet of Despot Inc