Yang Company decides to expand its operations and will need to raise some money

Question

Yang Company decides to expand its operations and will need to raise some money to fund the purchase of an adjacent building. Yang decides to borrow $15000 from its bank and issue $10000 of common stock. Prior to purchasing , how would Yang record the bank borrowing and issuance of common stock?

A.      Debit cash $25000; Credit bank loan payable $15000 and common stock $10000

B.      Debit bank loan receivable $15000 and common stock $10000; Credit cash $25000

C.      Debit cash $5000 and common stock $10000; Credit bank loan payable $15000

D.      Debit bank loan payable $15000 and common stock $10000; Credit cash $25000

E.       None of the above are correct

Explanation / Answer

C.      Debit cash $5000 and common stock $10000; Credit bank loan payable $15000

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