A company sold (issued) 100 shares of common stock with a par value of $1 at a price of $5 per share. What is the effect on the accounting equation? Increase cash $500; increase retained earnings, $500. Increase cash $500; increase common stock $100 and increase paid-in-capital $400 decrease cash $500; increase common stock $500. decrease cash $500; decrease common stock $100 and increase paid-in-capital $400.