A corporation issued 2,500 shares of its no par common stock at a cash price of $11 per share.The entry to record this transaction would be:

A) Debit Cash $27,500; credit Paid-in Capital in Excess of Par Value,Common Stock $2,500; credit Common Stock $25,000.
B) Debit Cash $27,500; credit Common Stock $27,500.
C) Debit Common Stock $27,500; credit Cash $27,500.
D) Debit Treasury Stock $27,500; credit Cash $27,500.
E) Debit Treasury Stock $2,500; debit Paid-in Capital in Excess of Par Value,Treasury Stock $25,000; credit Common Stock $27,500.

Question

Darden Fletcher · Accepted Answer

Final Answer : B, Explanation :  The entry to record the issuance of no par common stock is a debit to Cash and a credit to Common Stock for the total amount received. There is no par value to record in excess of the stated value, so options A and E are incorrect. Option C is incorrect because it records the transaction in reverse order. Option D is incorrect because it records the transaction as if the corporation is buying back its own stock instead of issuing new stock. Therefore, the best choice is B.

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