The entry to record TLR, Inc. selling 1,200 shares of $6 par common stock at $10 per share would be to:

Question

Quizplus · Accepted Answer

When common stock is sold at a price higher than its par value, there is a portion of the sale price that exceeds the par value. This excess amount is recorded in the account called "Paid-In Capital in Excess of Par-Common Stock".

In this case, TLR, Inc. sold 1,200 shares of $6 par common stock at $10 per share, which means that the total sale amount is $12,000 ($10 x 1,200). The total par value of the shares sold is $7,200 ($6 x 1,200), and the excess amount is $4,800 ($12,000 - $7,200).

Therefore, the entry to record this transaction would be to debit Cash $12,000, credit Common Stock $7,200, and credit Paid-In Capital in Excess of Par-Common Stock $4,800.

The Entry to Record TLR, Inc