Financial Accounting

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Issue Stock: Impact on Accounting Equation

FINACT-6PWU9P

Driplet Company issued 5,000 shares of \$1 par common stock for \$30 per share cash. What effect, in addition to the increase in cash, does this transaction have on the accounting equation for Driplet?

A

Common stock increases \$150,000.

B

Common stock increases \$5,000; Paid in Capital in Excess of Par increases \$145,000.

C

Common stock increases \$5,000; Retained Earnings increases \$145,000.

D

Common stock increases \$5,000; Gain on Sale of Common Stock increases \$145,000.