Asked by
vipul singh
on Oct 15, 2024
Verified
A corporation issued 5,000 shares of its no par common stock that was assigned a $1 stated value per share.The issue price was $10 per share.The entry to record this transaction would be:
A) Debit Cash $50,000; credit Paid-in Capital in Excess of Stated Value,Common Stock $45,000; credit Common Stock $5,000.
B) Debit Cash $50,000; credit Common Stock $50,000.
C) Debit Common Stock $50,000; credit Cash $50,000.
D) Debit Treasury Stock $50,000; credit Cash $50,000.
E) Debit Common Stock $25,000; debit Paid-in Capital in Excess of Par Value,Common Stock $5,000; credit Common Stock $45,000.
No Par Common Stock
Shares issued without a nominal or face value, where the value is determined by the price investors are willing to pay.
Stated Value
A value assigned to no-par value stock by the corporation's board, not based on market price but used for accounting purposes.
Issue Price
Issue price is the price at which a new set of securities, such as bonds or stock, is offered to the public for the first time.
- Understand the process and effects of issuing common stock, including no par and stated value stocks, and the concept of paid-in capital.
Verified Answer
MA
Learning Objectives
- Understand the process and effects of issuing common stock, including no par and stated value stocks, and the concept of paid-in capital.