Beruflich Dokumente
Kultur Dokumente
It consists of 2 parts:
1) Amount invested by Stockholders:
a- Capital stocks (shares) :
May be common stocks or preferred stocks.
b- Additional paid in capital (APIC).
2) Amount earned by the company :
Retained earnings (R/E)
1) The holders have the right to 1) They are ranked after the
take the dividends and the preferred stocks 'holders for the
liquidation distribution before dividends and the liquidation
the common stocks' holders. distribution.
2) The holders do not have the 2)The holders have the voting right
voting right in the general assembly.
in the general assembly.
Q2: What are the par value and the issuance price of the
share?
1- The par value:
It is the stated value (face value) of share.
2- The issuance price:
It is the selling price of the share and it may be
equal par value or more than it only and the difference
between them is additional paid in capital (APIC).
Solution
The entry is:
*Cash 10000
**Common stock 10000
-------------------------------------------------------------------
* issuance pric = 1000 shares x 10 =10000
** par value = 1000 shares x 10 =10000
Example (2)
On 1/1 /2012 the ABC co. issued 1000 common shares for
$12 per share and the par value per share was $10.
Required: Prepare the issuance entry.
Solution
* Cash 12000
**Common stock 10000
***APIC 2000
----------------------------------------------------------------------
* issuance price = 1000 shares x 12 =12000
** par value = 1000 shares x 10 =10000
*** APIC= 1000 x (12-10)= 2000.
Example (3)
ABC co. issued 2000 common shares, the par value of
the common is $10/share and the issuance is $15,and it
issued 3000 preferred shares the par value is $20/share
and the issuance price is $28.
Required:
Prepare the issuance entry(s).
Solution
* Cash 114000
**Common stock 20000
APIC - Common 10000
***Preferred stock 60000
APIC - Preferred 24000
------------------------------------------------------------------------
* Cash ( by issuance price of shares)
= (2000 common shares x 15) + (3000 preferred shares x 28)
=114000
**Common stock
par value = 2000 shares x 10 =20000
APIC = 2000 x (15-10) = 10000.
***Preferred stock
par value = 3000 shares x 20 =60000
APIC = 3000 x (28-20) = 24000.