If a company issues capital stock at a price exceeding the par value of the stock, the excess proceeds over par value are credited to: a) Other Income b) Liability for Stockholders Excess Contributions c) Contributed Capital - Excess over Par d) Retained Earnings - Restricted e) Retained Earnings - Unrestricted

The correct answer to the given question is option c) Contributed Capital - Excess over Par.

The total assets of a firm are usually financed through two broad categories of sources, namely, the debt and the equity. The debt consists of the short-term debt and the long-term debt whereas the equity consists of equity share capital and the retained earnings.

The equity share capital can be raised from the common shareholders or the preferred shareholders. If the issue price of a given share is more than the par value or face value, the raised capital can be divided into two components, namely, the contributed capital corresponding to the par value and the contributed capital corresponding to excess over par value.

The income remaining after distribution of dividends to the shareholders is represented as retained earnings which in turn is used for financing the future projects of the firm.