Exhibit 15-1
Hanson Co. issued 10,000 shares of its $5 par common stock for $15 a share. In addition, it incurred legal and accounting fees, stock certificate costs, and other related expenses totaling $18,500.
-Refer to Exhibit 15-1. Assume the sale occurred after the initial issuance at incorporation. The entry to record the sale and related expenses would include a
A) credit to Additional Paid-in Capital on Common Stock for $81,500.
B) credit to Organization Expense for $18,500.
C) credit to Common Stock for $150,000.
D) debit to Cash for $150,000.

Question

Quizplus · Accepted Answer

The credit to Additional Paid-in Capital on Common Stock is calculated as the excess of the issue price over the par value: (10,000 shares * ($15 - $5)) = $100,000. However, the expenses of $18,500 reduce this amount, resulting in a credit of $81,500.

Exhibit 15-1 Hanson Co. Issued 10,000 Shares of Its $5 Par Common