Issue of common stock: Common stock represents equity ownership in a corporation. Common stockholders bear a higher amount of risk of loss and are also entitled to higher benefits in the company’s profits and assets. Common stock can be issued at par or at premium or discount.
No par stock is recorded in the accounts at issue price. However, some states require shares to be issued at a particular value. This value is called stated value. A company cannot issue shares below the stated value.
Common shares can be issued not only for cash but also in exchange of another asset or as a payment for an expense.
To prepare: To prepare the
Given information: 1st issue: 80,000 shares at $5 per share.
2nd issue: 5,000 shares at $108 per share.
3rd issue: 24,000 shares for a land; asking price is $90,000 and fair value is $80,000.
4th issue: 80,000 shares at $7 per share.
5th issue: 10,000 shares for $50,000 attorney’s payment.
6th issue: 10,000 shares at $9 per share.
7th issue: 1,000 preferences at $112 per share.
Par value: No par.
Stated value: $1.
Chapter 15 Solutions
Intermediate Accounting, Binder Ready Version