A company issues 1 million shares of common stock with a per value of $0.07 for

Question

A company issues 1 million shares of common stock with a per value of $0.07 for $15.50 a share. The entry to record this transaction Includes a deblt to Cash for $70,000, a debit to Captal Recelvable for $15,430,000, a credit to Common Stock for $70,000, and a credi to Addtional Pald-In Capital for $15,430,000 $15,500,000, a credit to Common Stock for $70,000, and a credit to Additional Paid-in Capital for $15,430,000 O $15,500.000 and a credit to Common Stock for $15,500,000 O $70,000 and a credit to Common Stock for $70,000 O Type here to search DOLL F4 F8 F10 3 6 7 8 WE

Explanation / Answer

When common stock is issued at a price above par value.Then amouunt equivalent to par value is recorded to common stock and amount in excess of par value is recorded to additional paid-in Capital. Number of Shares Par Value per share Total amount Common Stock                   10,00,000 $               0.07 $           70,000 Additional paid in capital                   10,00,000 15.43 $ 1,54,30,000 (15.50-.07) Total Cash received $ 1,55,00,000 Thus, Cash will be debited for $ 1,55,00,000 and Common Stock will be credited for $           70,000 Additional paid in capital will be credited for $ 1,54,30,000

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