Question

On January 2, 2014, the Hoover Corporation issued 43,000 shares of $10 stated-value common stock for $29.50 per share. Which of the following statements is true? The Paid-in Capital in Excess of Stated Value account will increase by $838,500. The Cash account will increase by $860,000. The Common Stock account will increase by $1,268,500. The Stock Payable account will increase by $1,268,500.

Answer 1

The Paid-in Capital in Excess of Stated Value account will increase by $838,500

Step-by-step explanation:

The journal entry to record the issuance of common stock is shown below:

Cash A/c Dr $1,268,500 (43,000 shares × $29.50)

To Common Stock $430,000 (43,000 shares × $10)

To Additional Paid-in Capital in excess of par - Common Stock $838,500

(Being the issuance of stock is recorded and the remaining balance is credited to the additional paid-in capital account)

While issuing the stock, we debited the cash account and credited the common stock and additional paid-in capital account