Final answer:
The correct accounting entry for Delta Corp's issue of shares is for Common Stock to be credited $40,000 for the par value of the shares, and Paid-in Capital in Excess of Par to be credited $16,000 for the additional amount received over the par value. The correct answer to how the transaction is recorded is C).
Step-by-step explanation:
When Delta Corp issues 4,000 shares of $10 par value common stock at $14 per share, the accounting entry should reflect both the par value of the shares and the excess over the par value that the shares were sold for. The correct answer to how the transaction is recorded is C) Common Stock $40,000 and Paid-in Capital in Excess of Par $16,000.
This is because the par value of the shares issued (4,000 shares × $10 per share) amounts to $40,000, which is credited to Common Stock. Additionally, since the shares were issued at a price above the par value, a total of $56,000 ($14 per share × 4,000 shares) was received. The additional $16,000 ($56,000 received - $40,000 par value) is credited to Paid-in Capital in Excess of Par.
When Delta Corp issues 4,000 shares of $10 par value common stock at $14 per share, the transaction is recorded by crediting the Common Stock account with $40,000 and the Paid-in Capital in Excess of Par account with $16,000. This is because the Common Stock account reflects the par value of the shares issued, which is $40,000 (4,000 shares x $10 par value). The Paid-in Capital in Excess of Par account reflects the amount paid by the investors above the par value of the shares, which is $16,000 (4,000 shares x $4 excess of issue price).