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Knowledge Check 01 Byrd Corporation issued 5,000 shares of $0.05 par value common stock for $10 per share. Prepare the appropriate journal entry to record the stock issuance. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

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Answer and Explanation:

The journal entry to record the stock issuance is shown below:

Cash Dr (5,000 × $10) $50,000

       To Common stock $250 (5,000 × $0.05)

       To Additional paid in capital - common stock $49,750

(Being the issuance of the shares is recorded)

Here cash is debited as it increased the assets and common stock & additional paid in capital is credited as it increased the liabilities

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