Question

Josie Inc.'s charter authorizes 1,000 shares of stock with no par value. Josie Inc. sells 100 shares of stock at its initial offering for $5 per share. The journal entry to record this transaction will include a (debit/credit) _________ to Common Stock, for $ _________.

Answer 1

... credit to Common Stock, for $500.

Step-by-step explanation:

When a company sells stock, they should record the par value of the stock under the Common Stock account, but since Josie's stock didn't have any par value, the selling price should be recorded under Common Stock.

The complete journal entry should be:

• Dr Cash account 500
• Cr Common Stock account 500

Since cash is an asset account and it increases, it should be debited.

Since common stock is an equity account and it increases, it should be credited.