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17 November, 05:00

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:

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  1. 17 November, 05:55
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    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
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