Roberts Company's common stock has a $2 stated value per share. The company issued 3,000 shares at $8 per share on January 30 of the current year. Which is the correct journal entry to record this transaction? O Cash 24,000 Common Stock - $2 Stated Value Paid-in Capital in Excess of Stated - Common O Common Stock - $2 Stated Value Cash O Common Stock - $2 Stated Value Paid-in Capital in Excess of Stated - Common Cash O Cash Common Stock-$2 Stated Value 24,000 6,000 18,000 24,000 6,000 18,000 24,000 24,000 24,000
Roberts Company's common stock has a $2 stated value per share. The company issued 3,000 shares at $8 per share on January 30 of the current year. Which is the correct journal entry to record this transaction? O Cash 24,000 Common Stock - $2 Stated Value Paid-in Capital in Excess of Stated - Common O Common Stock - $2 Stated Value Cash O Common Stock - $2 Stated Value Paid-in Capital in Excess of Stated - Common Cash O Cash Common Stock-$2 Stated Value 24,000 6,000 18,000 24,000 6,000 18,000 24,000 24,000 24,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:**Roberts Company's Journal Entry for Stock Issuance**
Roberts Company's common stock has a $2 stated value per share. The company issued 3,000 shares at $8 per share on January 30 of the current year. Which is the correct journal entry to record this transaction?
1. **Option A:**
- Cash: $24,000
- Common Stock - $2 Stated Value: $6,000
- Paid-in Capital in Excess of Stated - Common: $18,000
2. **Option B:**
- Common Stock - $2 Stated Value: $24,000
- Cash: $24,000
3. **Option C:**
- Common Stock - $2 Stated Value: $6,000
- Paid-in Capital in Excess of Stated - Common: $18,000
- Cash: $24,000
4. **Option D:**
- Cash: $24,000
- Common Stock — $2 Stated Value: $24,000
**Explanation:**
- **Option A** correctly reflects the issuance of stock where:
- Cash account is increased by the total cash received: \(3,000 \times \$8 = \$24,000\).
- Common Stock account is increased by the stated value: \(3,000 \times \$2 = \$6,000\).
- Paid-in Capital in Excess of Stated Value account is increased by the excess: \(\$24,000 - \$6,000 = \$18,000\).
- **Options B, C, and D** do not accurately capture the excess value over the stated value in the journal entry.
Expert Solution
Explanation -
Journal Entry -
Journal entry is the record entered into by the company for the transactions for the financial year. Common Stock is the shares issued by the company to the shareholders of the company. Any amount collected by the company more than stated value shall be recorded as Paid in capital.
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