Which of the following journal entries is correct when common stock is initially issued for cash at a price in excess of the stock's stated value?

A)
B)
C)
D)

Question

Which of the following journal entries is correct when common stock is initially issued for cash at a price in excess of the stock's stated value?A)   B)   C)   D)

Paige Eliadis · Accepted Answer

Final Answer : B, Explanation :  When common stock is initially issued for cash at a price in excess of the stock's stated value, the amount received in excess of the stated value is recorded in the additional paid-in capital account. In option B, the common stock is credited for its stated value ($10,000), and the additional paid-in capital account is credited for the excess amount received ($90,000). This results in a total credit of $100,000, which is equal to the amount received for the common stock issuance.

Which of the following journal entries is correct when common stock is initially issued for cash at a price in excess of the stock's stated value?

A)
B)
C)
D)

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Learning Objectives

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