Which of the following entries records the purchase of common stock by stockholders?
A) debit Common Stock; credit Accounts Receivable
B) debit Cash; credit Common Stock
C) debit Dividends; credit Cash
D) debit Fees Earned; credit Common Stock

Question

Quizplus · Accepted Answer

The purchase of common stock by stockholders would involve the company receiving cash, which would be recorded as a debit to the Cash account, and issuing new shares of common stock, which would be recorded as a credit to the Common Stock account. Option A is incorrect because Accounts Receivable would not be involved in the purchase of common stock. Option C is incorrect because it records the payment of dividends to stockholders, not the purchase of common stock. Option D is incorrect because Fees Earned would not be involved in the purchase of common stock.

Which of the Following Entries Records the Purchase of Common