If stock with a $2 par value was issued for $12 per share,
A)common stock would be credited for $12 per share
B)common stock cannot be issued for more than par value
C)paid-in capital in excess of par should be credited for $10 per share
D)gain on sale of common stock should be credited for $10 per share

Question

Quizplus · Accepted Answer

When a stock with a par value is issued at a price higher than par value, the common stock is credited for the par value, which in this case is $2 per share. The remaining amount above the par value is credited to the paid-in capital in excess of par account, which in this case is $10 per share ($12 selling price - $2 par value). Therefore, option C is the best choice. Options A, B, and D are incorrect.

If Stock with a $2 Par Value Was Issued for $12