Alma Corp. issues 1,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to:
A) Common Stock $14,000.
B) Common Stock $10,000 and Paid-in Capital in Excess of Par Value $4,000.
C) Common Stock $4,000 and Paid-in Capital in Excess of Stated Value $10,000.
D) Common Stock $10,000 and Retained Earnings $4,000.

Question

Quizplus · Accepted Answer

When issuing stock at a price higher than the par value, the portion of the proceeds above the par value is recorded as "Paid-in Capital in Excess of Par Value." In this case, the par value is $10 and the stock was issued at $14, so the credits would be $10,000 to Common Stock (1,000 shares x $10 par value) and $4,000 to Paid-in Capital in Excess of Par Value.

Alma Corp Issues 1,000 Shares of $10 Par Value Common Stock