If Norben Company issues 4,000 shares of $5 par value common stock for $140,000, the account
A) Common Stock will be credited for $140,000.
B) Paid-in Capital in Excess of Par Value will be credited for $20,000.
C) Paid-in Capital in Excess of Par Value will be credited for $120,000.
D) Cash will be debited for $120,000.

Question

Quizplus · Accepted Answer

The common stock is issued at a price above its par value, so the excess amount over the par value is credited to the Paid-in Capital in Excess of Par Value account. The par value is $5 per share, so for 4,000 shares, the par value is $20,000. The remaining $120,000 ($140,000 - $20,000) is credited to Paid-in Capital in Excess of Par Value.

If Norben Company Issues 4,000 Shares of $5 Par Value