Question

Alliance Corp. issues 2,330 shares of $8 par value common stock at $17 per share. When the transaction is recorded, what credit entry or entries are made? Select the correct answer. a. Common Stock $39,610. b. Common Stock $18,640 and Paid-in Capital in Excess of Stated Value $20,970. c. Common Stock $18,640 and Paid-in Capital in Excess of Par Value $20,970.d. Common Stock $20,970 and Retained Earnings $18,640.

Answer 1

Answer:

c. Common Stock $18,640 and Paid-in Capital in Excess of Par Value $20,970.

Explanation:

The journal entry to record the issuance of common stock is shown below:

Cash A/c Dr $39,610         (2,330 shares × $17)

    To Common Stock $18,640        (2,330 shares × $8)

    To  Additional Paid-in Capital in excess of par - Common Stock $20,970

(Being the issuance of stock is recorded and the remaining balance is credited to the additional paid-in capital account)

While issuing the stock, we debited the cash account and credited the common stock and additional paid-in capital account