Question

Alt Corp. issues 3,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to:a. Common Stock $30,000 and Paid-in Capital in Excess of Stated Value $12,000.b. Common Stock $28,000.c. Common Stock $30,000 and Paid-in Capital in Excess of Par Value $12,000.d. Common Stock $30,000 and Retained Earnings $12,000.

Answer 1

Answer:

c. Common Stock $30,000 and Paid-in Capital in Excess of Par Value $12,000

Explanation:

The journal entry for the issue of shares is shown below:

Cash A/c Dr $ (3,000 shares × $14 per share) = $42,000

   To common stock  (3,000 shares × $10 per share) = $30,000

   To Paid-in Capital in Excess of Par Value  $12,000

(Being issue of shares recorded)

So, the cash account is debited whereas the common stock and paid-in capital should be credited

And, the remaining balance should be transferred to the Paid-in Capital in Excess of Par Value