Chaney Corporation issued 20,000 shares of common stock on January 1, 2014. The stock has par value of $1.00 per share and was sold at $30 per share. The journal entry for this transaction would:

Question

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The journal entry for the issuance of common stock would be a debit to Cash for the total amount received ($600,000) and a credit to Common stock for the number of shares issued multiplied by the par value per share ($20,000). The difference between the cash received and the par value of the stock is credited to Additional paid-in capital (or Paid-in capital in excess of par value), which in this case is $580,000. Therefore, the correct journal entry is a debit to Cash for $600,000, a credit to Common stock for $20,000, and a credit to Additional paid-in capital (or Paid-in capital in excess of par value) for $580,000, as shown in Choice C.

Chaney Corporation Issued 20,000 Shares of Common Stock on January