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23 September, 19:48

When Wisconsin Corporation was formed on January 1, the corporate charter provided for 100,000 share of $10 par value common stock. The following transaction was among those engaged in by the corporation during its first month of operation: The corporation issued 8,500 shares of stock at a price of $16 per share.

The entry to record the above transaction would include a

A. debit to Cash for $85,000

B. credit to Common Stock for $136,000

C. credit to Paid in Capital in Excess of Par for $51,000

D. debit to Common Stock for $85,000

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Answers (1)
  1. 23 September, 23:10
    0
    Option (C) is correct.

    Explanation:

    The Journal entry is as follows:

    Cash A/c (8,500 * $16) Dr. $136,000

    To Common stock $85,000

    To Paid in Capital in Excess of Par $51,000

    Workings:

    Common stock:

    = Shares of stock * Par value of stock

    = 8,500 shares * $10

    = $85,000

    Paid in Capital in Excess of Par:

    = 8,500 shares * ($16 - $10)

    = 8,500 shares * $6

    = $51,000
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