Delta Corp. issues 4000 shares of $10 par value common stock at $14 per share. When the transaction is recorded credits are made to

A) Common Stock $40000 and Paid-in Capital in Excess of Stated Value $16000.
B) Common Stock $56000.
C) Common Stock $40000 and Paid-in Capital in Excess of Par $16000.
D) Common Stock $40000 and Retained Earnings $16000.

The par value of the shares is $10 per share, so the total par value of the 4000 shares is $40000 (4000 shares x $10 per share). Because the shares were sold for $14 per share, the company received $56000 (4000 shares x $14 per share). The difference between the par value and the issue price is $4 per share, so the total amount of paid-in capital in excess of par value is $16000 (4000 shares x $4 per share). Therefore, the correct journal entry would be to credit Common Stock for $40000 and to credit Paid-in Capital in Excess of Par for $16000, for a total credit of $56000.