Alpha Company issued 1,000 shares of $10 par value common stock to stockholders,in exchange for $15,000 cash.Which of the following correctly describes the impact of this transaction on Alpha's financial statements?

A) A $15,000 investment is reported as a long-term investment.
B) Stockholders have invested $25,000 as stockholders' equity.
C) Common stock is reported at $15,000 in stockholders' equity.
D) Additional paid-in capital of $5,000 is reported in stockholders' equity.

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Zybrea Knight · Accepted Answer

Final Answer : D, Explanation :  The transaction involves issuing 1,000 shares at $10 par value for $15,000 cash. This means the common stock (par value) is credited for $10,000 (1,000 shares * $10 par value), and the excess amount received over par value, $5,000 ($15,000 - $10,000), is credited to additional paid-in capital. Thus, D is correct.

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