Question

10. If no-par stock is issued without a stated value, then a. the par value is automatically $1 per share. b. the entire proceeds are considered to be legal capital. c. there is no legal capital. d. the corporation is automatically in violation of its state charter. I Baylor Company issues 8,000 shares of $5 par value common stock for $280,000, a. Common Stock will be credited for $280,000. b. Paid-In Capital in Excess of Par will be credited for $40,000 c. Paid-In Capital in Excess of Par will be credited for $240,000. d. Cash will be debited for $240,000. 12 East Asian Imports, Inc. issued 15,000 shares of stock at a stated value of $8 The total issue of stock sold for $15 per share. The journal entry to transaction would include a a debit to Cash for $120,000.

Answer 1

10) OPTION - B.

If no par stock is issued without a stated value then the entire proceeds are considered to be legal capital.

11) OPTION - C.

Particular	Debit	Credit
Cash	$280,000
Common stock (8,000 × $5)		$40,000
Paid in capital in excess of par($280,000 - 40,000)		$240,000

(Being common stock issued and excess transferred to Paid in capital in excess of par).

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