Lasik Vision, Inc. began business on June 1, 2019. The corporate charter authorized issuance of 1,000 shares of no-par common stock and 4,000 shares of $6 par, 6% cumulative preferred stock. As of the beginning of 2020, 200 shares of common stock had been issued and none of the preferred stock had been issued. If the company issues 400 shares of common stock on March 1, 2020 for $10 per share, the journal entry would include a

Question

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When a company issues stock, the journal entry to record the transaction includes a credit to the Common Stock account for the par value of the shares issued and a credit to the Paid-in Capital in Excess of Par—Common Stock account for any amount received over the par value.
In this case, Lasik Vision, Inc. is issuing 400 shares of no-par common stock at $10 per share. Since the common stock has no par value, the entire amount received from the issuance will be credited to the Common Stock account. There will be no amount credited to the Paid-in Capital in Excess of Par—Common Stock account because no-par stock does not have a par value to exceed.
The journal entry for the issuance of the 400 shares of common stock at $10 per share would be:
Debit: Cash (400 shares x $10/share) = $4,000
Credit: Common Stock (400 shares x $10/share) = $4,000
Therefore, the correct answer is:
b. $4,000 credit to common stock.