When 5000 shares of $ 6 stated value common stock is issued at $ 12 per​ share, ________.

Question

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.