Choice "A" is correct. No entry is made when the rights are issued since no consideration is given. If the rights are exercised and stock is issued, then common stock and additional paid-in capital increase.
Choice "c" is incorrect. If the rights are exercised and stock is issued, then common stock and additional paid-in capital will increase.
Choice "d" is incorrect. The common stock account will increase, by par value of stock issued, only when stock is issued upon exercise of the rights.
Choice "b" is incorrect. Additional paid-in capital will increase, by the difference of the purchase price and the par value, only when stock is issued upon exercise of the rights.
