Common Stock
Definition: Par value of issued common shares
Scope:BroadDifficulty:Easy
Par value of issued common shares
Common Journal Entries
| Account | Debit | Credit |
|---|---|---|
| 1. Issue stock above par | ||
| Issue 10,000 shares ($1 par) at $15 each. | ||
| CashAsset+ | $150,000 | |
| Common StockEquity+ | $10,000 | |
| Additional Paid-In CapitalEquity+ | $140,000 | |
| Par value to Common Stock; excess to APIC. | ||
| 2. Issue stock for non-cash asset | ||
| Issue 2,000 shares ($1 par) for equipment worth $50,000. | ||
| EquipmentAsset+ | $50,000 | |
| Common StockEquity+ | $2,000 | |
| Additional Paid-In CapitalEquity+ | $48,000 | |
| Recorded at fair value of the asset received. | ||
T-AccountsA visual representation of a ledger account shaped like the letter T. Left side shows debits, right side shows credits.
CashAsset account. Debits increase the balance. Credits decrease the balance.AssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$150,000.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$150,000.00
Common StockCommon StockEquityThe owner’s residual interest in the business. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$10,000.00
$2,000.00
Normal bal. ▶
$12,000.00
Additional Paid-In CapitalAdditional Paid-In CapitalEquityThe owner’s residual interest in the business. Normal balance: credit. Credits increase, debits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$140,000.00
$48,000.00
Normal bal. ▶
$188,000.00
EquipmentEquipmentAssetA resource owned by the business. Normal balance: debit. Debits increase, credits decrease.
DebitLeft side of a journal entry. Increases assets and expenses. Decreases liabilities, equity, and revenue.
$50,000.00
◀ Normal bal.
CreditRight side of a journal entry. Increases liabilities, equity, and revenue. Decreases assets and expenses.
$50,000.00
DurationLong-Term
Related Subjects
See Also
- CashPaired in entry: Exercise stock options
- APIC - Stock OptionsPaired in entry: Exercise stock options
External Links
- Common stock — Wikipedia