A company raised $45,000 by issuing its common stock. What is the journal entry for the issuance of stock?
Cash (A) (inc) $45,000
…Accounts Payable (L) (inc) $45,000
Capital Stock (OE) (inc) $45,000
…Cash (A) (inc) $45,000
…Capital Stock (OE) (inc) $45,000
Capital Stock (OE) (dec) $45,000
…Cash (A) (dec) $45,000
Correct answer. The increase in Cash, an Asset account, should be debited on the left side. The issuance of Common Stock increases the company’s capital stock, an Owners’ Equity account, and should be credited on the right side.
