What is the journal entry to issue common stock for cash above par value?

• A. Debit Cash; Credit Common Stock (par value) and Credit Additional Paid-In Capital (APIC) for excess over par.
• B. Debit Common Stock; Credit Cash; Credit APIC for excess.
• C. Debit APIC; Credit Cash; Debit Common Stock for par value.
• D. Debit Cash; Credit APIC; Debit Common Stock for par value.

Answer: (B)

When stock is issued for cash above its par value, you increase assets for the cash received and increase equity for both the par value of the stock and the additional paid-in capital for the amount above par. The proper journal entry is to debit Cash for the total cash received, credit Common Stock for the total par value, and credit Additional Paid-In Capital for the excess over par.

Example: if you issue stock for 50,000 cash with a par value of 1 per share and 40,000 shares are issued, you would record Debit Cash 50,000; Credit Common Stock 40,000; Credit APIC 10,000.

This approach keeps Common Stock reflecting just the par value and uses APIC to capture the extra amount investors pay above par.