Ogilvie Corporation issued 12,000 shares of no-par stock for $40 per share. Ogilvie was authorized to issue 35,000 shares. What effect will this event have on the company's financial statements?

Question

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The sale of 12,000 shares of no-par stock for $40 per share results in cash inflow of $480,000 ($40 x 12,000). This increases the company's assets and stockholders' equity by the same amount since no-par stock has no stated or assigned value. The authorization to issue 35,000 shares is not relevant to the effect on the financial statements.

Ogilvie Corporation Issued 12,000 Shares of No-Par Stock for $40