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When a person starts a corporation, the first thing they often do is open a bank...

When a person starts a corporation, the first thing they often do is open a bank account for the corporation. If the person invests $100,000 cash into the corporation in exchange for 1,000 shares of $.01 par value common stock, the corporation records this transaction in their general ledger accounts as follows - Debit Cash $100,000, Credit Common Stock $10, and Credit Paid-In-Capital (or otherwise Additional Paid-In-Capital) $99,990

A. True

B. False

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Answer #1

A. True

Debit Cash = $100000

Credit common stock = 1000 shares * $0.01 = $10

Credit Paid-In-Capital (or otherwise Additional Paid-In-Capital) = $100000 - $10 = $99990

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