If Vickers Company issues 4,000 shares of $5 par value common stock for $140,000,
A) Common Stock will be credited for $140,000.
B) Paid-In Capital in Excess of Par Value will be credited for $20,000.
C) Paid-In Capital in Excess of Par Value will be credited for $120,000.
D) Cash will be debited for $120,000.

Question

Quizplus · Accepted Answer

The par value of the 4,000 shares is $20,000 (4,000 shares x $5 par value per share). Since the company received $140,000 for the shares, the excess of the amount received over the par value ($140,000 - $20,000) is $120,000. This amount will be credited to Paid-In Capital in Excess of Par Value. Common Stock will be credited for the par value of the shares issued ($20,000). Therefore, choice C is correct.

If Vickers Company Issues 4,000 Shares of $5 Par Value