Paltrowski Company issued 1 million shares of $10 stated value common stock.The selling price was $40 per share.What journal entry is prepared?

Question

Quizplus · Accepted Answer

When the company issues stock above the stated value, the excess amount is recorded as additional paid-in capital in excess of stated value. Therefore, the journal entry should include a debit to Cash for $40 million, credit to Common Stock for $10 million, and credit to Paid-in Capital in Excess of Stated Value-Common for $30 million. Option A is incorrect because it does not account for the excess amount received. Option B mentions "par" value which is not applicable in this question as the stock has a stated value. Option D is incorrect because issuing stock does not affect retained earnings.

Paltrowski Company Issued 1 Million Shares of $10 Stated Value