The Burnham Corp.issues 2,000 shares of no-par stock for $10 cash per share.How would the company record this transaction?
A)Debit Cash for $20,000 and credit Paid-In Capital,Common Stock for $20,000.
B)Debit Cash for $20,000 and credit Common Stock,No-Par Value for $20,000.
C)Debit Cash for $20,000 and credit Paid-In Capital for $20,000.
D)Debit Cash for $20,000 and credit Paid-In Capital in Excess of Par Value,Common Stock for $20,000.
E)Debit Common Stock,No-Par Value for $20,000 and credit Cash for $20,000.

Question

Quizplus · Accepted Answer

The company would record this transaction by debiting Cash for the total amount received ($20,000) and crediting Common Stock, No-Par Value for the same amount. Since the stock is sold at no-par value, there is no excess of par value to be recorded.