Question

When no-par common stock with a stated value is issued for cash, the common stock account is credited for an amount equal to the cash proceeds.
O True O False

Answer 1

Answer:

False

Explanation:

In case of the no par common stock, if the stated value is issued for cash the following journal entry would be required which is given below

Cash A/c Dr XXXXX

    To Common Stock XXXXX

    To  Additional Paid-in Capital in excess of stated value - Common Stock XXXXX

(Being the issuance of stock is recorded and the remaining balance is credited to the additional paid-in capital account)

The excess amount of stated value should be transferred to additional paid-in capital