Accounting Demystified

Recording the Issuance

No matter whether the stock is par value, no par value but stated value, or no par value, the debit part of the transaction is always what the company receives. Usually this is cash. The credit side depends on the type of stock: whether it is par value, no par value but stated value, or no par value. If there is a par value or a stated value, there will be a credit to an account called Common stock for the number of shares issued multiplied by the par or stated value. If this is less than the amount received, there will be another credit to an account called Additional paid-in capital or sometimes Paid-in capital in excess of par.

So let us assume that a company has stock with a par value of $0.01. The company sells 100,000 ...