Questions: Question 37 2 pts Thompson Company's common stock carries a par value of 1 per share. The company is authorized to issue an additional 13,000 shares of common stock. What would the journal entry be for the issuance of 4,000 shares of common stock at par value? Cash 4,000 Common Stock - 1 Par Value 4,000

The answer is the first one:

\[ \begin{tabular}{|l|r|r|} \hline Cash & 4,000 & \\ \hline Common Stock - \$1 Par Value & & 4,000 \\ \hline \end{tabular} \]

Explanation:

1. First Option:

   • Cash (Debit) 4,000: When the company issues 4,000 shares at a par value of $1 each, it receives cash. The total cash received is 4,000 shares * $1 = $4,000. Therefore, the Cash account is debited by $4,000.
   • Common Stock - $1 Par Value (Credit) 4,000: The Common Stock account is credited by the par value of the shares issued, which is 4,000 shares * $1 = $4,000.

2. Second Option:

   • This option incorrectly debits the Common Stock account and credits the Cash account, which is the opposite of the correct entry. Therefore, it is incorrect.

3. Third Option:

   • This option shows a transaction for 13,000 shares, which is incorrect because the question specifies the issuance of only 4,000 shares.

4. Fourth Option:

   • Similar to the third option, this entry incorrectly reflects a transaction for 13,000 shares instead of 4,000 shares.

In summary, the correct journal entry for the issuance of 4,000 shares of common stock at par value is to debit Cash for $4,000 and credit Common Stock - $1 Par Value for $4,000.