19 May, 21:48

# 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 Common Stock \$6,000, debit Investment in Common Stock \$1,000; credit Cash \$7,000.b) Debit Cash \$7,000; credit Common Stock \$6,000; credit Paid-in Capital in Excess of Par Value, Common Stock \$1,000.c) Debit Cash \$7,000; credit Common Stock \$7,000.d) Debit Cash \$7,000; credit Paid-in Capital in Excess of Par Value, Common Stock \$6,000, credit Common Stock \$1,000.e) Debit Investment in Common Stock \$7,000; credit Cash \$7,000.

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1. 19 May, 23:40
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b) Debit Cash \$7,000; credit Common Stock \$6,000; credit Paid-in Capital in Excess of Par Value, Common Stock \$1,000.

Explanation:

When shares are issued and paid for, the entries required are debit to cash account and a credit to common stock. However, when the amount received is higher than the par value of the stock issued, the excess received is recorded as a share premium or Paid-in Capital in Excess of Par Value.

As such, where the par value is \$100 and 60 shares were issued, value of common stock issued

= \$100 * 60

= \$6,000

Paid-in Capital in Excess of Par Value = \$7,000 - \$6,000

= \$1,000