Question

When a corporation issues stock at a price above its par value, the accountant ______.

a) Debits Cash and increases assets for the amount of fair market value received
b) Credits Cash and decreases assets for the amount of fair market value received
c) Debits Stock and decreases assets for the par value
d) Credits Stock and increases assets for the par value

Answer 1

When a corporation issues stock above its par value, the accountant debits Cash and increases assets for the received fair market value.

Step-by-step explanation:

When a corporation issues stock at a price above its par value, the accountant debits Cash and increases assets for the amount of fair market value received. This is because when the corporation sells the stock at a higher price, it receives cash as a result.