The correct answer is option C. Common Stock $40,000 and Paid-in Capital in Excess of Par $16,000.
How is it so?
When Blossom Corp issues 4,000 shares of $10 par value common stock at $14 per share, the total par value of the shares is $10 * 4,000 = $40,000. The amount received above the par value is calculated as ($14 - $10) * 4,000 = $16,000.
The journal entry to record this transaction would be:
1. Debit Cash: $14 * 4,000 = $56,000 (This represents the total cash received from the issuance)
2. Credit Common Stock (at par value): $40,000
3. Credit Paid-in Capital in Excess of Par (or Paid-in Capital in Excess of Stated Value): $16,000
So, the correct answer is C) Common Stock $40,000 and Paid-in Capital in Excess of Par $16,000.
Complete question:
Blossom Corp, issues 4,000 shares of $10 par value common stock at $14 per share. When the transaction is recorded, credits are made to A. Common Stock $40,000and Paid-in Capital in Excess of Stated Value $16,000. B) Common Stock $56,000 C) Common Stock $40,000 and Paid-in Capital in Excess of Par $16,000 D) Common Stock $40,000 and Retained Earnings $16,000.