If Stock Is Issued at a Price Above Par Value

question 56

Multiple Choice

If stock is issued at a price above par value, the transaction that would be recorded is to

• A) debit Cash, credit Common Stock or Preferred Stock, and credit Paid-In Capital in Excess of Par.
• B) debit Common Stock or Preferred Stock, debit Paid-In Capital in Excess of Par, and credit Cash.
• C) debit Cash, debit Common Stock or Preferred Stock, and credit Paid-In Capital in Excess of Par.
• D) debit Paid-In Capital in Excess of Par, credit Common Stock or Preferred Stock, and credit Cash.

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Definitions:

Face Value

The nominal or dollar value printed on a bond, note, or other financial instrument, representing the amount due at maturity.

Journal Entry

A record in the books of accounts that represents a business transaction, including information about debit and credit entries.

Bonds Payable

Long-term liabilities that represent money a company owes to bondholders, to be repaid at a specified maturity date.

Carrying Value

The net amount at which an asset is valued on the balance sheet, calculated as the original cost minus any accumulated depreciation, depletion, or amortization.