A corporation sold 10,000 shares of its no-par common for $10.00 per share. The corporation will not sell its shares for less than $6.00 per share, because this is "necessary" to protect the bondholders. The corporation should record this transaction as follows: $\begin{array}{|l|l|l|l|}
\hline 1&\text { Common shares } & 60,000 & \
\hline &\text { Contributed capital in excess of par } & 40,000 & \
\hline &\text { Cash } & & 100,000 \
\hline 2&\text { Common shares } & 100,000 & \
\hline &\text { Cash } & & 100,000 \
\hline 3&\text { Cash } & 100,000 & \
\hline &\text { Common shares } & & 100,000 \
\hline 4&\text { Cash } & 100,000 & \
\hline &\text { Common shares } & & 60,000 \
\hline &\text { Contributed capital in excess of par } & & 40,000 \
\hline
\end{array}$
A) Choice 1
B) Choice 2
C) Choice 3
D) Choice 4

Question

Quizplus · Accepted Answer

The corporation sold 10,000 no-par shares at $10 each, totaling $100,000. The correct entry is to debit Cash for $100,000 and credit Common Shares for $100,000, as there is no par value or additional paid-in capital involved.

A Corporation Sold 10,000 Shares of Its No-Par Common for $10.00