# A Company Sells 10,000 Shares Of Previously Authorized Stock At The Par Value Of \$10 Per Share.

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A company sells 10,000 shares of previously authorized stock at the par value of \$10 per share. What's the correct entry to record the transaction?

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Answer: A company sells 10,000 shares of previously authorized stock at the par value of \$10 per share. What's the correct entry to record the transaction?

When a company sells shares at par value, the entry to record the transaction affects two accounts: Cash and Common Stock.

Here's how the transaction would be recorded:

• Debit Cash: The company receives cash from the sale of the shares. The amount would be the number of shares sold multiplied by the selling price per share. In this case, 10,000 shares * \$10/share = \$100,000.

• Credit Common Stock: The Common Stock account is credited for the total par value of the shares sold. Again, this would be the number of shares sold multiplied by the par value per share. In this scenario, 10,000 shares * \$10/share = \$100,000.

So, the journal entry would look like this:

Account Debit (\$) Credit (\$)
Cash 100,000
Common Stock   100,000

To record the transaction of the company selling 10,000 shares of authorized stock, one should debit Cash for \$100,000 and credit Common Stock by the same amount.

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