If a corporation issued 25,000 shares of $1.00 par common stock for $2.85 per share. The appropriate journal entry for the IPO is:

a) Date Account

1-Jan Cash $25,000

Common Stock $25,000

b) Date Account

1-Jan Cash $71,250

Common Stock $71,250

c) Date Account

1-Jan Cash $25,000

Additional Paid in Capital $46,250

Common Stock $71,250

d) Date Account

1-Jan Cash $71,250

Additional Paid in Capital $46,250

Common Stock $25,000

Question

Business

Gauge Robinson

26 May, 01:59

If a corporation issued 25,000 shares of $1.00 par common stock for $2.85 per share. The appropriate journal entry for the IPO is:

a) Date Account

1-Jan Cash $25,000

Common Stock $25,000

b) Date Account

1-Jan Cash $71,250

Common Stock $71,250

c) Date Account

1-Jan Cash $25,000

Additional Paid in Capital $46,250

Common Stock $71,250

d) Date Account

1-Jan Cash $71,250

Additional Paid in Capital $46,250

Common Stock $25,000

+2

Answers (1)

Know the Answer?

Marlon Conway · Answer 1

The correct answer is Option D.

Explanation:

Common stock is a share issued by a company to the public. The public enjoy dividend on their common stock when the company pays dividends.

Based on the question, the par value of the common stock is 25,000 shares x $1.00 = $25,000 while the total cash collected by the company would be 25,000 shares x $2.85 = $71,250 and the appropriate entries will be:

Debit Cash $71,250

Credit Additional Paid in Capital $46,250

Credit Common Stock $25,000

(Issuance of common stock)