If Baylor Company issues 8000 shares of $5 par value common stock for $280000
A) Common Stock will be credited for $280000.
B) Paid-In Capital in Excess of Par will be credited for $40000.
C) Paid-In Capital in Excess of Par will be credited for $240000.
D) Cash will be debited for $240000.

Question

Quizplus · Accepted Answer

The par value of the 8000 shares of common stock is $5, which means the total par value is 8000 x $5 = $40000. However, Baylor Company received $280000 in cash from the issuance of the shares, which is $240000 more than the total par value of the shares. This $240000 is considered to be "Paid-In Capital in Excess of Par." Therefore, the Common Stock account will be credited for $40000 (the total par value of the shares) and the Paid-In Capital in Excess of Par account will be credited for $240000 (the excess amount received over par value). The Cash account will be debited for $280000 (the amount received from the issuance of the shares).

If Baylor Company Issues 8000 Shares of $5 Par Value