Dawson Company issued 500 no-par ordinary shares for $ \$ 4,500 $. Which of the following journal entries would be made if the shares have a stated value of $ \$ 2 $ per share?

Question

Quizplus · Accepted Answer

With a stated value of $2 per share, the amount of share capital to be recorded is $1,000 ($2 x 500 shares). The remaining $3,500 ($4,500 - $1,000) would be recorded as additional paid-in capital. Therefore, the correct journal entry would be to debit Cash for $4,500, credit Share Capital for $1,000, and credit Additional Paid-in Capital for $3,500 (Option C). Option A and B do not account for the additional paid-in capital. Option D does not recognize the stated value of the shares.

Dawson Company Issued 500 No-Par Ordinary Shares For $4,500 \$ 4,500 $4,500

Dawson Company Issued 500 No-Par Ordinary Shares For $\$ 4,500$