Question

multiple select question

select all that apply

sea the world cruises issued 400,000, $1 par value shares of the 1,000,000 shares authorized for $1,000,000. the entry to record the issuance of the stock includes _______. (check all that apply.)

debit cash $1,000,000
credit common stock $1
debit common stock $1,000,000
credit additional paid-in capital $600,000
credit additional paid-in capital $999,999
credit common stock $400,000
credit common stock $1,000,000
credit cash $1,000,000

Explanation:

Calculate cash received

$$ \text{Cash Received} = \$1,000,000 $$

This requires a debit to Cash for \(\$1,000,000\).

Calculate par value of common stock

$$ \text{Common Stock (Par Value)} = 400,000 \text{ shares} \times \$1 \text{ per share} = \$400,000 $$

This requires a credit to Common Stock for \(\$400,000\).

Calculate additional paid-in capital

$$ \text{Additional Paid-in Capital} = \text{Cash Received} - \text{Common Stock Par Value} $$

$$ \text{Additional Paid-in Capital} = \$1,000,000 - \$400,000 = \$600,000 $$

This requires a credit to Additional Paid-in Capital for \(\$600,000\).

Answer:

• debit Cash $1,000,000 (Correct answer)
• credit Common Stock $1
• debit Common Stock $1,000,000
• credit Additional Paid-in Capital $600,000 (Correct answer)
• credit Additional Paid-in Capital $999,999
• credit Common Stock $400,000 (Correct answer)
• credit Common Stock $1,000,000
• credit Cash $1,000,000