Asked by Jessica Colley on Jun 15, 2024
Verified
If Tools Corporation issues 5,000 common shares for $200,000, which account will be credited?
A) Common Shares
B) Retained Earnings
C) Contributed Surplus
D) Cash
Contributed Surplus
Contributed Surplus is an equity account that reflects excess amounts received by a company over the par value of its stock from the sale of shares directly to investors.
Common Shares
Equity investments that represent ownership in a company, granting holders voting rights and a share in the company's profits through dividends.
- Gain insights into the procedural aspects of documenting and reporting equity transactions financially.
Verified Answer
VA
Vanshika AroraJun 17, 2024
Final Answer :
A
Explanation :
When a company issues common shares, the account credited is the Common Shares account, reflecting the equity contribution from shareholders.
Learning Objectives
- Gain insights into the procedural aspects of documenting and reporting equity transactions financially.