3 - Issuing Common Stock Above Par A company issues...

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Classes of Stock Common Basic form of common stock Have rights of ownership Benefit most of company succeeds Risk most if company does not succeed Preferred Have preference in receiving dividends and assets in case of liquidation Hybrid between common stock and debt Rare for corporations to issue Classes of Stock Par value Arbitrary amount assigned to share of stock In most states, represents minimum price for shares Legal capital No-par Does not have a par value May have a stated value Learning Objective 2 Issuing Common Stock at Par A company issues 100,000 shares of $5 par value common stock at par The common stock account is always credited in the amount of the shares issued multiplied by par value
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Unformatted text preview: Issuing Common Stock Above Par A company issues $100,000 shares of $5 par value stock for $12 per share The amount above par is credited to Paid-in Capital in Excess of Par Issuing Common Stock for Noncash Assets Assets recorded at their fair values Common stock and paid-in capital credited accordingly Suppose a company purchased equipment valued at $800,000 by issuing 50,000 shares of its $5 par common stock Preferred Stock Follows the same pattern as common stock entries Preferred stock is credited for the shares issued multiplied by the par value A separate paid-in capital account is used if stock is issued above par...
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