The entry to record the issuance of 600 shares of $2 par-value common stock for $10 a share consists of a debit to Cash for $6,000 and:

Question

Quizplus · Accepted Answer

When shares are issued for more than the par value, the excess amount is credited to the Paid-in Capital in Excess of Par Value – Common Stock account. In this case, the total amount paid for the shares is $6,000, which is $10 per share. Since the par value is $2 per share, the total par value of the 600 shares is $1,200 ($2 x 600). Therefore, the Common Stock account is credited for $1,200, and the Paid-in Capital in Excess of Par Value – Common Stock account is credited for the excess amount of $4,800 ($6,000 - $1,200). Choice D is the correct answer.

The Entry to Record the Issuance of 600 Shares of $2