A company issued 60 shares of $100 par value common stock for $7,000 cash. The j

Question

A company issued 60 shares of $100 par value common stock for $7,000 cash. The journal entry to record the issuance is:

A. Debit Cash $7,000; credit Common Stock $7,000.

B. Debit Investment in Common Stock $7,000; credit Cash $7,000.

C. Debit Cash $7,000; credit Common Stock $6,000; credit Paid-in Capital in Excess of Par Value, Common Stock $1,000.

D. Debit Common Stock $6,000; debit Investment in Common Stock $1,000; credit Cash $7,000.

E. Debit Cash $7,000; credit Paid-in Capital in Excess of Par Value, Common Stock $6,000; credit Common Stock $1,000.

Explanation / Answer

The journal entry to record the issuance :

Cash a/c..Dr$7000

To common stock $6000(60*100)

To Paid-in Capital in Excess of Par Value-common stock $1000

Hence the correct option is C

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