Michael Hudson owns 400 shares of Surefoot Enterprises.The capital stock of Surefoot Enterprises has a par value of $8 per share.Michael Hudson sells his 400 shares of Surefoot Enterprises stock to Brian Haas for $15 per share.The effect of this transaction on Surefoot Enterprises,would be to
A)increase the cash account by $6,000 and increase the capital stock account by $6,000.
B)increase the cash account by $6,000 and decrease the capital stock account by $6,000.
C)increase the cash account by $6,000,increase the capital stock account by $3,200,and increase the paid-in capital in excess of par account by $2,800.
D)Surefoot Enterprises would not record this transaction but would note the change in ownership.
E)Surefoot Enterprises records this transaction but would not note the change in ownership.

Question

Quizplus · Accepted Answer

When a shareholder sells their shares to another person, the transaction occurs between the two individuals outside of the company's financial records. Therefore, Surefoot Enterprises would not record this transaction in its accounts, but it might note the change in ownership for its internal records or shareholder registry.

Michael Hudson Owns 400 Shares of Surefoot Enterprises