New Corp. issues 2,000 shares of $10 par value common stock at $16 per share. When the transaction is recorded, credits are made to

Question

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The common stock issued is 2,000 shares with a par value of $10, which amounts to $20,000. The proceeds from the issuance of the stock are $16 per share, which totals to $32,000. The difference between the par value of the stock and the proceeds is called the paid-in capital in excess of par value, which is $6 per share ($16 - $10). Therefore, $12,000 (2,000 x $6) should be credited to the Paid-in Capital in Excess of Par account while $20,000 should be credited to Common Stock. Therefore, the correct answer is C.

New Corp Issues 2,000 Shares of $10 Par Value Common Stock