A corporation issued 5,000 shares of its no par common stock having a $1 stated value per share. The issue price was $10 per share. The entry to record this transaction would be:
A)Debit Cash $50,000; credit Paid-in Capital in Excess of Par Value, Common Stock $45,000; credit Common Stock $5,000.
B)Debit Cash $50,000; credit Common Stock $50,000.
C)Debit Common Stock $50,000; credit Cash $50,000.
D)Debit Treasury Stock $50,000; credit Cash $50,000.
E)Debit Common Stock $25,000; debit Paid-in Capital in Excess of Par Value, Common Stock $5,000; credit Common Stock $45,000.

Question

Quizplus · Accepted Answer

The entry to record the issuance of no par common stock with a stated value includes the credit to common stock at the stated value and the remaining amount goes into the account of paid-in capital in excess of par value. In this case, 5,000 shares at $1 stated value per share equals $5,000 in common stock. The remaining $45,000 goes into the paid-in capital in excess of par value. The entry should be Debit Cash $50,000; credit Paid-in Capital in Excess of Par Value, Common Stock $45,000; credit Common Stock $5,000.

A Corporation Issued 5,000 Shares of Its No Par Common