On April 1, 10,000 shares of $20 par common stock were issued at $24. Required:
Illustrate the effects on the accounts and the financial statements.

The journal entry to record this transaction would be:

April 1, 10,000 shares issued

Dr Cash 240,000

    Cr Common stock 200,000

    Cr Additional paid in capital 40,000

The balance sheet is affected:

Assets                = Liabilities       +      Stockholders' equity

Cash                  =   NA                     Common stock         APIC

$240,000                                           $200,000        +   $40,000

increases                                            increases              increases

The cash flow statement is also affected since cash from financing activities increases by $240,000. The statement of shareholders' equity is also affected because equity increases by $240,000.

The income statement is not affected.

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