Question

If Pina Colada Corp. issues 9500 shares of $5 par value common stock for $217500, the account

A-

Cash will be debited for $170000.

B-

Common Stock will be credited for $217500.

C-

Paid-in Capital in Excess of Par Value will be credited for $170000.

D-

Paid-in Capital in Excess of Par Value will be credited for $47500.

Answer 1

Ans.	Option C
	Calculations and Explanations:
	The following journal entry is made for this transaction:
	Transaction	General Journal	Debit	Credit
	1	Cash	$217,500
		Common stock (9,500 * $5)		$47,500
		Paid in capital in excess of par		$170,000
		(Common shares issued on premium)
	*Cash includes the amount of shares issued.
	*Common stock includes the face value of shares which is the product of shares issued and par value of shares issued.
	*Paid in capital in excess of par is the difference between Cash and Common stock.
	*Paid in capital in excess of par = $217,500 - $47,500 = $170,000