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the entry to record the issuance of 5000 shares of $10 par common stock for $12.50 per share:

a. debit to cash for $50,000
b. debit to paid in capital in secess of par common for 12,500
c. credit to common stock for $62,500
d. debit to cash for $62,500

im thining A because 5000 x $10 = 50000

2007-09-30 18:55:37 · 4 answers · asked by bob 2 in Business & Finance Corporations

4 answers

My answer to these :
Cash P 62,500.00
Common Stock P 50,000.00
Additional Paid up in
excess of Par value stock 12,500.00

2007-09-30 19:23:27 · answer #1 · answered by glen l 1 · 0 0

The correct entry is to debit cash $62,500, credit the common stock account $50,000 and credit additional paid in capital $12,500. The par value of the stock is credited to the stock account and any money received above par value is recorded as paid-in capital. Both these accounts represent legal capital, that is, amounts that may not be returned to shareholders except under special circumstances such as a liquidation. Legal capital represents a safety cushion for creditors, by ensuring that some assets are available to repay debts.

2007-10-01 00:48:29 · answer #2 · answered by Anonymous · 0 0

No, it isn't (a). It's (d) cos you received 5,000 shares x $12.50 per share.

2007-09-30 23:47:32 · answer #3 · answered by Sandy 7 · 0 0

c

2016-05-17 22:36:55 · answer #4 · answered by ? 3 · 0 0

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