Question

A company issued 6,000 shares of stock at $10 each, with a par value of $2 what amount is credited as common stock

Answer 1

The answer provided below has been developed in a clear step by step manner. Step: 1

Number of shares issued = 6,000

Issue price per share = $10 Par value per share = $2

Debit to cash = Number of shares issued x Issue price per share

= 6,000 x $10 = $60,000

Credit to common stock = Number of shares issued x Par value

per share 6,000 x $2

= $12,000

Credit to paid in capital in excess of par = Number of shares issued x (Issue price per share - Par value per share)

= 6,000 × ($10-$2) = 6,000 x $8

= $48,000

The amount is credited as paid in capital in excess of par = $48,000