What would the journal entry be?!?

Question

Kim, Inc. issued 5,000 shares of stock at a stated value of $10/share. The total issue of stock sold for $15/share. The journal entry to record this transaction would include a

credit to Paid-in Capital in Excess of Par Value for $25,000.

credit to Common Stock for $75,000.

debit to Cash for $50,000.

credit to Common Stock for $50,000.

Answer 1

The journal entry would be:

dr. Cash                                            $75,000

cr.           Common Stock                                   $50,000

cr.           Additional Paid-in Capital (APIC)     $25,000

If the stock was sold for $15 a share, the debit (as seen above) would be $75K ($15 x 5,000).

You would credit 'common stock' with an amount equal to the number of shares sold multiplied by the par value of the common stock (5,000 x $10).

The difference between the cash received for the stock ($75K) and the par value of the stock ($50K) would be credited to APIC ($75,000 - $50,000 = $25,000).

I hope this helps!