Question

A corporation sold 18,500 shares of its $10 par value common stock at a cash price of $11 per share. The entry to record this transaction would include:

Answer 1

Answer:

cash                                    203,500 debit

  Common Stock                             185,000 credit

  Paid-In Capital in excess of par     18,500 credit

Explanation:

The amount of cash receive for the company will be the 18,500 shares times the market price. In this case the market price is $11

we sold 185,000 shares x $11 each = 203,500 total proceeds from the sale

Then, we will record the common stock at par

18,500 x $10 par value = 185,000

The difference will be the capital paid in excess of par, the investor who purchased the shares paid more than par, so we have an addtional paid-in forthe difference:

203,500 - 185,000 = 18,500