Ari's Cafe began operations on March 1,2017.The corporate charter authorized the issuance of 3,000 shares of $2 par value common stock and 1,000 shares of $3 par value,8% cumulative preferred stock.The company's fiscal year ends on February 28.Ari's sold 500 shares of common stock at $6 per share on April 1.What impact does the entry to record the April 1 transaction have on total stockholders' equity?

Question

Quizplus · Accepted Answer

Selling 500 shares of common stock at $6 per share results in an increase of $3,000 in common stock (500* $2 par value) and an increase in paid-in-capital in excess of par value of $0 per share. Therefore, total stockholders' equity will increase by $3,000.

Ari's Cafe Began Operations on March 1,2017