Answer: Both Assets and Equity would increase by $20,000
Explanation:
If the company issues 1,000 shares for $20, the company would receive cash of:
= 1,000 * 20
= $20,000
Cash is an asset so the Assets would increase by $20,000.
The entry to equity would comprise of $1,000 to Common stock and $19,000 to Additional Paid-in capital. Equity would therefore increase by $20,000 in total.
