A company sells 1 million shares of common stock with a par value of $0.02 for $15 a share.To record the transaction,the company would:
A)debit Cash for $20,000 and credit Common Stock for $20,000.
B)debit Cash for $15 million and credit Common Stock for $15 million.
C)debit Cash for $15 million,credit Common Stock for $20,000 and credit Additional Paid-in Capital for $14,980,000.
D)debit Cash for $20,000,debit Capital Receivable for $14,980,000,credit Common Stock for $20,000 and credit Additional Paid-in Capital for $14,980,000.

Question

Quizplus · Accepted Answer

The company receives $15 million in cash (1 million shares x $15 per share). The common stock is recorded at par value, which is $20,000 (1 million shares x $0.02 par value). The excess amount over par value, $14,980,000, is credited to Additional Paid-in Capital.

A Company Sells 1 Million Shares of Common Stock with a Par