Question

Alt Corp. issues 5,000 shares of $10 par value common stock at $14 per share. When the transaction

is recorded, credits are made to:
a. Common Stock $50,000 and Paid-in Capital in Excess of Stated Value $20,000.
b. Common Stock $70,000.
c. Common Stock $50,000 and Paid-in Capital in Excess of Par Value $20,000.
d. Common Stock $50,000 and Retained Earnings $20,000.

Answer 1

c. Common Stock $50,000 and Paid-in Capital in Excess of Par Value $20,000.

Step-by-step explanation:

The journal entry is shown below:

Cash $70,000 (5,000 shares × $14)

To Common stock $50,000 (5,000 shares × $10)

To Additional Paid in capital in excess of par value - Common stock $20,000 (5,000 shares × $4)

(Being the issuance of the common stock is recorded)

For recording this we debited the cash as it increased assets and at the same time it also increased the overall stockholder equity so common stock and the additional paid in capital for common stock is credited