Additional Paid in Capital and Common Stock Accounts

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)?
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

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".
--
Paul Thomas, CPA
snipped-for-privacy@bellsouth.net
  Click to see the full signature.
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload
wrote:

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
Add pictures here
<% if( /^image/.test(type) ){ %>
<% } %>
<%-name%>
Add image file
Upload

BeanSmart.com is a site by and for consumers of financial services and advice. We are not affiliated with any of the banks, financial services or software manufacturers discussed here. All logos and trade names are the property of their respective owners.

Tax and financial advice you come across on this site is freely given by your peers and professionals on their own time and out of the kindness of their hearts. We can guarantee neither accuracy of such advice nor its applicability for your situation. Simply put, you are fully responsible for the results of using information from this site in real life situations.