Comfort Mattresses,Inc.sold 26,000 shares of its $1 par value common stock at a cash price of $12 per share.The entry to record this transaction would be:

Question

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The journal entry to record the sale of common stock at a cash price includes a debit to cash for the total cash received ($312,000) and a credit to common stock for the par value of the shares issued ($26,000). The difference between the cash received and the par value of the shares issued represents the excess of the selling price over the par value, known as paid-in capital in excess of par value. Therefore, a credit is made to paid-in capital in excess of par value, common stock for the remaining amount ($286,000). Hence, the correct journal entry would be to debit cash for $312,000, credit common stock for $26,000, and credit paid-in capital in excess of par value, common stock for $286,000. Choice A is the only one that correctly reflects this entry.