Question
In: Accounting
A corporation issues 5,000 shares of common stock for $160,000. The stock has a stated value...
A corporation issues 5,000 shares of common stock for $160,000. The stock has a stated value of $15 per share. What amount of credit to Common Stock would the journal entry to record the stock issuance include?
Select the correct answer.
$75,000
$85,000
$5,000
$160,000
Solutions
Expert Solution
| Common Stock account will be credited with par value / stated value only. | |||||
| Remaining amount will credited to Premium account or amount above par value of shares | |||||
| As the number of share issued is 5,000 | |||||
| Here, stated/par value of share is $ 15 per share, so common stock will be credited with 75,000 (15 * 5,000) | |||||
| Journal: | |||||
| Bank A/c Dr. | 160,000 | ||||
| To Common stock A/c | 75,000 | ||||
| To Security Premium/ amount above par value A/c | 85,000 | ||||
| Ans. | $75,000 | ||||
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