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Trying to determine the correct answer for common stock Purchase of equipment , dividends paid issuance...

Trying to determine the correct answer for common stock

Purchase of equipment , dividends paid issuance of common stock, sale of building .

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Answer #1

Answer: issuance of common stock

This comes under “common stock” category in the balance sheet liability side. Every issue increases common stock; therefore, Cash becomes debit and Common Stock becomes credit.

Other options are not correct:

Purchase equipment: this comes under “equipment” in the balance sheet asset side.

Dividends paid: this comes under “retained earnings” in the balance sheet liability side.

Sale of building: this comes under “building” in the balance sheet asset side.

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