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Thomas Corporation issued 2,000 shares of $5 par value common stock for $20 per share
Thomas Corporation issued 2,000 shares of $5 par value common stock for $20 per share. The entry to record this transaction includes a credit to Paid-in Capital in Excess of Par for:
a. $40,000.
b. $30,000.
c. $10,000.
d. $20,000.
Expert Solution
Answer:
b .
Step-by-Step explanation
Value of Excess paid in Capital = No. of Shares (Issue price - Par value)
Issue price = 20
Par Value = 5
Value of Excess paid in Capital = 2000 ( 20 - 5)
Value of Excess paid in Capital = $30,000
The Journal entry on issue of shares :
Cash A/c Dr. $ 40,000
To Share Capital A/c $ 10,000
To Excess Paid in Capital $ 30000
Therefore Excess paid in Capital shall include a credit to $ 30,000
Hence Option B is the correct answer.
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