Issuing stock. Remember that the account Common Stock represents the par value of the common stock issued over the life of the company. The Common stock or Preferred stock account is increased (credited) by the product of the number of shares times the par value of those shares. If the stock is issued at par, this will equal the amount of cash received. NotePar value equals issue price. When stock is issued at an amount higher than par, the extra amount is credited to Additional Paid-in-Capital account. The cash received will equal the number of shares issued times the issue price.

Assume 5,000 shares with $10 par value were issued for a price of $15, complete the journal entry to record the issuance of shares. Note par value DOES NOT equal issue price.

dr. Cash_____________( # of shares times issue price )

cr. Common Stock_______________( # of shares times par value)

cr. Additional Paid in Capital_______________(Cash minus Common stock)

Assume 50,000 shares of $1 par value common stock were issued for a price of $52 per share, write the journal entry. Remember to use APIC for the amount that the issue price exceeds the par value.

Assume 2,500 shares of its $30 par value common stock were issued for a price of $84 per share. Write the journal entry.

Assume 30,000 shares of $100 par value Preferred stock was issued at par value. Write the journal entry. Note If stock is issued at par value, the issue price equals the par value of the stock. Use Preferred Stock account if it is preferred stock that is issued.

Sometimes shares may be issued in exchange for another asset other than cash. When this happens, the fair market value of the asset exchanged is used to represent the issue price and the appropriate account is debited. A company issued 60,000 share of $5 par value common stock in exchange for an office building with a fair market value of $800,000. Complete the journal entry for the transaction.

dr. Building____________________(fair market value)

cr. Common Stock_______________________ (# of shares times par value)

cr. APIC________________________ (difference)