Question

nexis corp. issues 3,100 shares of $9 par value common stock at $18 per share. when the transaction is journalized, credit(s) are made to

Answer 1

Credits are made to the Common Stock account for the par value of the shares, and to Paid-in Capital in Excess of Par Value for the amount received over the par value when Nexis Corp. issues shares.

Step-by-step explanation:

When Nexis Corp. issues 3,100 shares of $9 par value common stock at $18 per share, the company receives cash for the shares it has sold. The journal entry for this transaction will show a debit to the Cash account for the total amount received, and credits to two equity accounts: Common Stock (for the par value amount) and Paid-in Capital in Excess of Par Value (for the amount received over par value).

To journalize this transaction:

• Debit Cash: 3,100 shares × $18 per share = $55,800
• Credit Common Stock: 3,100 shares × $9 par value = $27,900
• Credit Paid-in Capital in Excess of Par: amount received minus par value = ($55,800 - $27,900) = $27,900

The complete journal entry will look like this:

• Cash ............... $55,800
• Common Stock ...... $27,900
• Paid-in Capital in Excess of Par ... $27,900