Question

When 5000 shares of $ 6 stated value common stock is issued at $ 12 per​ share, ________.
A.
the difference between the issue price and the stated value is credited to Paid-In Capital in Excess of Stated-Common
B.
Common Stock long dash $ 6 Stated is credited for $ 60000
C.
the account titled Paid-In Capital in Excess of Stated-Common is used to record the issue price of the stock
D.
the accounting is exactly the same as the accounting for par value stock

Answer 1

When 5000 shares of $6 stated value common stock is issued at $12 per share, the correct answer is:

**A. the difference between the issue price and the stated value is credited to Paid-In Capital in Excess of Stated-Common.**

Here's a breakdown of how the accounting would work:

- The stated value of the stock is $6 per share, so for 5000 shares, the total stated value is:
\[
5000 \text{ shares} \times 6 = 30,000 \text{ dollars}
\]

- The total cash received from the stock issuance at $12 per share is:
\[
5000 \text{ shares} \times 12 = 60,000 \text{ dollars}
\]

- The difference between the cash received and the total stated value is:
\[
60,000 - 30,000 = 30,000 \text{ dollars}
\]
This amount is credited to the account "Paid-In Capital in Excess of Stated-Common."

So the journal entries would be as follows:

1. **Debit Cash** for $60,000
2. **Credit Common Stock (Stated Value)** for $30,000
3. **Credit Paid-In Capital in Excess of Stated Value - Common** for $30,000

Thus, answer A accurately reflects the accounting treatment for this transaction.