Question

Nexis Corp. issues 1,000 shares of $15 par value common stock at $22 per share. When the transaction is recorded, credits are made to a.Common Stock, $22,000, and Retained Earnings, $15,000 b.Common Stock, $7,000, and Paid-In Capital in Excess of Stated Value, $15,000 c.Common Stock, $15,000, and

Answer 1

Answer:

c.Common Stock, $15,000, and Paid-In Capital in Excess of Par—Common Stock, $7,000

Explanation:

When common stocks are issued the cash is received so, it is debited because cash is an asset and assets have debit nature. On the other hand equity accounts are credited, which may include the common stock (at par) account and Add-in-capital excess of par common stock ( if the stocks are issued over par value ).

Common Stocks = 1,000 x $15 = $15,000

Paid-In Capital in Excess of par = 1,000 x ( $22 - $15 ) = $7,000