Suppose a corporation issues 5,000 shares of $1 par common stock for $30 per share. In addition to the increase in cash, what effect does this transaction have on the accounting equation?

Question

Quizplus · Accepted Answer

The common stock is issued at $30 per share, but the par value is $1 per share. Therefore, the excess over par value is $29 per share ($30 - $1). For 5,000 shares, this results in $145,000 ($29 x 5,000) being recorded as paid-in capital in excess of par.

Suppose a Corporation Issues 5,000 Shares of $1 Par Common