If a company issues 2,500 shares of common stock at a market price of $48 per share, which of the following is the correct balance sheet effect?
A) Increase cash by $120,000 and increase contributed capital by $120,000
B) Increase cash by $120,000 and increase earned capital by $120,000
C) Increase stock revenues by $120,000
D) Stock issuances are not reported on the balance sheet
E) None of the above

Question

Quizplus · Accepted Answer

Issuing 2,500 shares at $48 each results in $120,000 (2,500 * $48) in cash, increasing both cash and contributed capital (equity) by this amount on the balance sheet.

If a Company Issues 2,500 Shares of Common Stock at a Market