Question

A corporation sold 17,500 shares of its $10 par value common stock at a cash price of $15 per share. The entry to record this transaction would include:

Answer 1

Cash $262,500 (debit)

Common Stock $175,000 (credit)

Paid in Excess of Par $87,500 (credit)

Step-by-step explanation:

With par stated stocks, any amount paid in excess of par value is accounted for in the stock`s paid in excess reserve.

The entry for this transaction will be :

Cash $262,500 (debit)

Common Stock $175,000 (credit)

Paid in Excess of Par $87,500 (credit)

Conclusion :

Of the $15 paid for each stock, $5 was paid in excess and will be accounted for in the common stock`s paid in excess reserve