Exhibit 16-1 Hanson Co.issued 10, 000 shares of its $5 par common stock for $15 a share.In addition, it incurred legal and accounting fees, stock certificate costs, and other related expenses totaling $8, 500.
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Refer to Exhibit 16-1.Assume the sale occurred after the initial issuance at incorporation.The entry to record the sale and related expenses would include a
A)credit to Additional Paid-in Capital on Common Stock for $91, 500
B)credit to Organization Expense for $8, 500
C)credit to Common Stock for $150, 000
D)debit to Cash for $150, 000

Question

Quizplus · Accepted Answer

The sale of common stock after the initial issuance at incorporation is recorded as a stock transaction, not an organization expense. The additional paid-in capital on common stock account is credited for the excess of the sale price over the par value of the stock.