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Ari’s Cafe began operations on March 1, 2015. The corporate charter authorized the issuance of 3,000 shares of $2 par value common stock and 1,000 shares of $3 par value, 8% cumulative preferred stock. The company's fiscal year ends on February 28. Ari’s sold 500 shares of common stock at $6 per share on April 1. What impact does the entry to record the April 1 transaction have on total stockholders' equity?

Respuesta :

TomShelby

Answer:

This new shares will increase total stockholders' equity by 3,000

Assets will increase by the same amount as well.

Explanation:

Ari’s sold 500 shares of common stock at $6 per share on April 1.

Ari's receiving cash in exchange of stock. It will recognize common stock for the par value and additional paid-in for the difference:

cash proceeds:   500 shares x $6 = 3,000

common stock:   500 shares x $1  =    500

additional paid-in in excess of PV    2,500

cash 3,000      debit (+A)

    common stock          500 credit (+SE)

    addtional paid-in     2500 credit (+SE)

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