a company issued 70 shares of $100 par value common stock for $8,600 cash. the journal entry to record the…

a company issued 70 shares of $100 par value common stock for $8,600 cash. the journal entry to record the issuance is: multiple choice debit cash $8,600; credit common stock $8,600. debit investment in common stock $8,600; credit cash $8,600. debit cash $8,600; credit common stock $7,000; credit paid - in capital in excess of par value, common stock $1,600.

a company issued 70 shares of $100 par value common stock for $8,600 cash. the journal entry to record the issuance is: multiple choice debit cash $8,600; credit common stock $8,600. debit investment in common stock $8,600; credit cash $8,600. debit cash $8,600; credit common stock $7,000; credit paid - in capital in excess of par value, common stock $1,600.

Answer

Explanation:

Step1: Calculate par - value of issued stock

The par - value of each share is $100 and 70 shares are issued. So the par - value of common stock = $100×70 = $7000.

Step2: Calculate paid - in capital in excess of par value

The company received $8600 in cash. The paid - in capital in excess of par value = Cash received - Par value of common stock = $8600 - $7000 = $1600.

Step3: Determine journal entry

When issuing stock, cash is debited for the amount received. Common stock is credited for its par value and paid - in capital in excess of par value is credited for the amount above par. So the journal entry is debit Cash $8600; credit Common Stock $7000; credit Paid - in Capital in Excess of Par Value, Common Stock $1600.

Answer:

Debit Cash $8,600; credit Common Stock $7,000; credit Paid - in Capital in Excess of Par Value, Common Stock $1,600.