If Everly Company issues 1,000 shares of $5 par value common stock for $75,000, the account
A) Common Stock will be credited for $75,000.
B) Paid-in Capital in excess of Par Value will be credited for $5,000.
C) Paid-in Capital in excess of Par Value will be credited for $70,000.
D) Cash will be debited for $70,000.

Question

Quizplus · Accepted Answer

The Par Value of the common stock is $5 per share, so 1,000 shares at $5 par value is equal to a total of $5,000. The remaining $70,000 is the amount paid that exceeds the par value, so it should be credited to Paid-in Capital in excess of Par Value. Therefore, the correct entry is:

Debit Cash for $75,000
Credit Common Stock for $5,000
Credit Paid-in Capital in excess of Par Value for $70,000

If Everly Company Issues 1,000 Shares of $5 Par Value