Issuing Stock for Cash – How to record the journal entry for the issuing of common stock for cash

Issuing common stock is how a corporation can generate capital, generate money, for use in the company. Issuing common stock provides stockholders with an equity interest in the company. Mot stock sales we think of on a stock exchange are trades between investors instead of stock issued from the company. We recording stock issued from the company we the company will receive cash from investors. The journal entry related to issuing stock for cash will include a debit to cash. The debit will be calculated as the amount of stock issued times the market price. We will issue stock for as much as we can, the market price. We will credit common stock, increasing equity, but not for the same amount as cash received if there is a par value. We will credit common stock for the amount of stock issued times the par value. The difference between the cash and common stock will be credited to additional paid in capital. For more accounting information see website. http://accountinginstruction.info/cou…

 

Leave a Reply

Your email address will not be published. Required fields are marked *