A corporation issued 2,500 shares its no par common stock at cash price of $11 p

Question

A corporation issued 2,500 shares its no par common stock at 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) Debits Treasury Stock $27,500; credit Cash $27,500.

e) Debit Treasury Stock $2,500; debit Paid-in Capital in Capital in Excess of Par Value, Tresury Stock $25,000; credit Common Stock $27,500.

Explanation / Answer

The entry for issue of shares of its no par stock is option b ie

Debit Cash 27500

credit Common stock 27500

Hence option (b)is correct

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