When Bayou Corporation was formed on January 1, 20xx, the corporate charter provided for 100,000 share of $10 par value common stock. The following transaction was among those engaged in by the corporation during its first month of operation: The corporation issued 9,000 shares of stock at a price of $23 per share. The entry to record the above transaction would include a

Question

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When a corporation issues shares of its stock, it receives cash from the shareholders in exchange for ownership in the company. The entry to record the issuance of stock involves debiting Cash for the amount received and crediting Common Stock for the par value of the shares issued. However, since the issue price of the shares ($23 per share) is higher than their par value ($10 per share), the excess amount is recorded as Paid in Capital in Excess of Par.

Therefore, the entry to record the issuance of 9,000 shares of $10 par value common stock at $23 per share would be:

Debit Cash: 9,000 shares x $23 = $207,000
Credit Common Stock: 9,000 shares x $10 = $90,000
Credit Paid in Capital in Excess of Par: $207,000 - $90,000 = $117,000

Therefore, the correct answer is C.

When Bayou Corporation Was Formed on January 1, 20xx, the Corporate