On January 2, 2014, the Hoover Corporation issued 25,000 shares of $10 stated-value common stock for $24 per share. Which of the following statements is true?

Question

Quizplus · Accepted Answer

The total amount received from issuing the common stock is calculated as follows: 
$24 per share x 25,000 shares = $600,000. 
The common stock account will increase by the stated value of the shares issued, which is $10 per share x 25,000 shares = $250,000. 
The remaining amount of $350,000 ($600,000 - $250,000) will be recorded in the Paid-in Capital in Excess of Stated Value account. Therefore, choice A is correct. 
Choice B is incorrect because the cash account will increase by $600,000, not $500,000. 
Choice C is incorrect because there is no stock payable account in this transaction. 
Choice D is incorrect because the Common Stock account will only increase by the stated value of the shares issued ($250,000), not $600,000.

On January 2, 2014, the Hoover Corporation Issued 25,000 Shares