Bentley Corporation received cash from issuing 17,000 shares of common stock at par on January1, 2018. The stock has a par value of $0.05 per share. Which is the correct journal entry to recordthis transaction? A) Cash is debited for $850, and Common Stock$0.05 Par Value is credited for $850. B) Paid-In Capital in Excess of Par-Common is debited for $16,150, and Common Stock$0.05Par Value is credited for $16,150. C) Cash is debited for $17,000, Common Stock$0.05 Par Value is credited for $850, andPaid-In Capital in Excess of Par-Common credited for $16,150. D) Cash is credited for $17,000 and Common Stock$0.05 Par Value is debited for $17,000.

Question

Dickerson

Business

19 February, 15:32

Bentley Corporation received cash from issuing 17,000 shares of common stock at par on January1, 2018. The stock has a par value of $0.05 per share. Which is the correct journal entry to recordthis transaction? A) Cash is debited for $850, and Common Stock$0.05 Par Value is credited for $850. B) Paid-In Capital in Excess of Par-Common is debited for $16,150, and Common Stock$0.05Par Value is credited for $16,150. C) Cash is debited for $17,000, Common Stock$0.05 Par Value is credited for $850, andPaid-In Capital in Excess of Par-Common credited for $16,150. D) Cash is credited for $17,000 and Common Stock$0.05 Par Value is debited for $17,000.

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Answers (1)

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Landin Blackburn · Answer 1

The correct option is A.

Explanation:

For computing the amount of issue of common shares, the following calculation is needed to be done:

= Number of shares * par value

= 17,000 shares * 0.05

= $850

The journal entry for cash received in respect of the issue of common share is given below:

Cash A/c Dr $850

To Common Stock $850

(Being cash is received in respect of the issue of common shares)

All other journal entries are wrong.

Hence, the correct option is A.