Evenrude Corporation is a new company about to issue stock.The corporation sells 2,000 shares of common stock (par value $2) at $10 per share.The journal entry to record this transaction is:

Question

Quizplus · Accepted Answer

The journal entry to record the issuance of stock is to debit Cash for the total amount received ($20,000) and credit Common Stock for the par value of the stock issued ($2 x 2,000 shares = $4,000). The difference between the amount received and the par value of the stock issued is credited to Additional Paid-in Capital ($20,000 - $4,000 = $16,000). Therefore, the correct option is B.

Evenrude Corporation Is a New Company About to Issue Stock