Here is an example that I downloaded from the Net:
January 13 Cash (10,000 shares @ $10) 100,000 Common Stock 10,000 Paid-in Capital in Excess of Stated Value 90,000 Issue common stock at a premium
Q1: Does this $100,000 raised as cash equate to: (IPO price of each stock) X (no. of shares)? Q2: What is the book value of the stock? Is it the IPO value or the (share price)/(P/B ratio)?
"Brablo" wrote
Probably not. It should be what the company received (after broker fees) from the stock sale. I would mention that $100,000 in stock sales isn't handled through a Merrill Lynch type of firm, but generally to a close friend.
Well, apparently the book value of each share would be the difference between the $100,000 received and the $90,000 of "excess of stated value", often called "additional paid in capital".
In simplest terms, par value is $1.00 per share, but it sold at $10.00 per share. If the value of the stock goes up to $12.00 per share, the next sale of 10,000 shares would be booked as:
Cash 120,000 Common Stock 10,000 Additional PIC 110,000
Common stock is booked at par. The difference between par and the selling price is additional PIC. Beverly
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