Question

A corporation sold 14,000 shares of its $1 par value common stock at a cash price of $13 per share. The entry to record this transaction would include: Multiple Choice A credit to Common Stock for $14,000. A debit to Cash for $14,000. A credit to Paid-in Capital in Excess of Par Value, Common Stock for $196,000. A debit to Paid-in Capital in Excess of Par Value, Common Stock for $182,000. A credit to Common Stock for $182,000.

Answer 1

Answer:

The entry to record this transaction would be:

                                    Debit                             Credit

    Cash                          $182,000  

                Common stock                                      $14,000

               Paid-In Capital in Excess of Par Value,    $168,000

               Common stock

A credit to Common Stock for $14,000.

Explanation:

A credit to Common Stock for $14,000.

In order to prepare the journal entry we would have to make the following calculations:

Cash= 14,000 * $13=$182,000

Common stock=14,000 * $1=$14,000

Therefore, there would be a Paid-In Capital in Excess of Par Value, Common stock=$182,000-$14,000=$168,000

Therefore, The entry to record this transaction would be:

                                    Debit                             Credit

    Cash                          $182,000  

                Common stock                                      $14,000

               Paid-In Capital in Excess of Par Value,    $168,000

               Common stock

Answer 2

Answer:

A credit to Common Stock for $14,000.

Explanation:

There are other entries required.  They include:

A debit to Cash Account for $182,000

A credit to APIC for $168,000

And a narration of the transaction in the journal, thus:

To record issue of 14,000 common stock at $13 per share.

The debit to Cash Account records the receipt of cash or increase in assets' value.

The credits to the Common Stock and APIC accounts complete the equity side of the accounting equation.

The APIC represents the Additional Paid-in Capital which receives the variations between the issue price and the par value.