{"id":4286,"date":"2020-10-28T00:47:04","date_gmt":"2020-10-28T00:47:04","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-financialaccounting\/?post_type=chapter&#038;p=4286"},"modified":"2020-12-03T18:50:35","modified_gmt":"2020-12-03T18:50:35","slug":"issuing-stock","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/chapter\/issuing-stock\/","title":{"raw":"Issuing Stock","rendered":"Issuing Stock"},"content":{"raw":"<div class=\"textbox learning-objectives\">\r\n<h3>Learning Outcomes<\/h3>\r\n<ul>\r\n \t<li>Account for the issuance of stock<\/li>\r\n<\/ul>\r\n<\/div>\r\n<a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/5107\/2020\/10\/03234612\/conference-room-768441_1920.jpg\"><img class=\"size-medium wp-image-5098 alignright\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/5107\/2020\/10\/03234612\/conference-room-768441_1920-300x200.jpg\" alt=\"A conference room table.\" width=\"300\" height=\"200\" \/><\/a>\r\n\r\nShares <strong>authorized<\/strong> is the number of shares a corporation is allowed to issue (sell). For a large corporation, this is based on a decision by its Board of Directors, a group elected to represent and serve the interest of the stockholders. Authorization is just permission to sell shares of stock; no action has actually taken place yet. Therefore, there is no journal entry for a stock authorization.\r\n\r\nShares <strong>issued<\/strong> is the number of shares a corporation has sold to stockholders for the first time. The number of shares issued cannot exceed the number of shares authorized.\r\n\r\nOccasionally, a corporation will buy back its own shares on the open market. We call those retired shares <em>treasury stock<\/em>. The number of issued shares that are still circulating in the open market are referred to as\u00a0<strong>outstanding<\/strong>.\r\n\r\nLook at the most current <a href=\"https:\/\/ir.homedepot.com\/financial-reports\/annual-reports\/recent\" target=\"_blank\" rel=\"noopener\">regulatory reports for The Home Depot, Inc<\/a>. On page 33 of the 2019 annual report, the company reports the following components of stockholders\u2019 equity:\r\n\r\n[caption id=\"attachment_6005\" align=\"aligncenter\" width=\"1024\"]<img class=\"wp-image-6005 size-large\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/5107\/2020\/10\/17040554\/Screen-Shot-2020-11-16-at-8.05.43-PM-1024x564.png\" alt=\"See caption for link to long description.\" width=\"1024\" height=\"564\" \/> See the <a href=\"https:\/\/course-building.s3-us-west-2.amazonaws.com\/Financial+Accounting\/Long+Descriptions\/The+Home+Depot+CBS.txt\" target=\"_blank\" rel=\"noopener\">balance sheet long description<\/a> here.[\/caption]\r\n\r\nNote this information as of the fiscal year that ended February 2, 2020:\r\n<ul>\r\n \t<li style=\"font-weight: 400;\">The par value of the common stock is $0.05 per share.<\/li>\r\n \t<li style=\"font-weight: 400;\">The number of shares authorized is listed as 10,000, but all numbers except per-share data are listed in millions, so that is actually 10 billion shares authorized.<\/li>\r\n \t<li style=\"font-weight: 400;\">There were 1.786 billion shares issued by the end of the 2019 fiscal year (February 2, 2020).<\/li>\r\n \t<li style=\"font-weight: 400;\">The company had 709 million shares of treasury stock at the end of the year (for which they paid $65,196 million dollars, which is an average cost of almost $92 per share).<\/li>\r\n \t<li style=\"font-weight: 400;\">If we subtract the number of shares in treasury stock from the number of shares issued (1,786 - 709 = 1,077) we should get the number of shares outstanding, and we do.<\/li>\r\n<\/ul>\r\nThe terms above may be better understood with an analogy to a credit card. If you are approved for a credit card, the terms will include a credit limit, such as $5,000, which is the maximum you are allowed to charge on the card. This is similar to \u201cshares authorized,\u201d the maximum number of shares a company is allowed to issue. The credit limit on a card does not mean you have to charge $5,000 on your first purchase but instead that you may continue to charge purchases up until you have reached a $5,000 maximum. The same holds true for shares issued. Smaller numbers of shares may be sold over time up to the maximum of the number of shares authorized.\r\n\r\nIf you wish to charge more than your credit limit on a credit card, you may contact the company that issued the card and request an increase in your credit limit. They may or may not grant this request. The same is true for a corporation. If it wishes to issue more shares than the number authorized, it may approach the Board of Directors with this request.\r\n\r\nFrom an accounting standpoint, issuing stock is similar to recording any other contribution of capital, except instead of crediting capital contributions, we credit the Common Stock account:\r\n<table class=\"fin-table gridded\"><caption class=\"u-clearfix\">Journal<span style=\"float: right;\">Page XX<\/span><\/caption>\r\n<thead>\r\n<tr>\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"col\">Date<\/th>\r\n<th scope=\"col\">Description<\/th>\r\n<th scope=\"col\">Post. Ref.<\/th>\r\n<th scope=\"col\">Debit<\/th>\r\n<th scope=\"col\">Credit<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<td>20--<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\">Oct. 1<\/th>\r\n<td>Checking<\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">150,000.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct. 1<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Common Stock<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">150,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct. 1<\/span><\/th>\r\n<td>To record issuance of 15,000 shares of $10 par stock at $10 per share<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nIf the stock is sold on the open market for an amount greater than the par value, which is most often the case, the entry looks like this:\r\n<table class=\"fin-table gridded\"><caption class=\"u-clearfix\">Journal<span style=\"float: right;\">Page XX<\/span><\/caption>\r\n<thead>\r\n<tr>\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"col\">Date<\/th>\r\n<th scope=\"col\">Description<\/th>\r\n<th scope=\"col\">Post. Ref.<\/th>\r\n<th scope=\"col\">Debit<\/th>\r\n<th scope=\"col\">Credit<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<td>20--<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\">Oct. 1<\/th>\r\n<td>Checking<\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">450,000.00<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct. 1<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Common Stock<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">150,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct. 1<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Paid in Capital in Excess of Par - Common Stock<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">300,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct. 1<\/span><\/th>\r\n<td>To record issuance of 15,000 shares of $10 par stock at $30 per share<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nThe journal entry for issuing preferred stock is very similar to the one for common stock. This time Preferred Stock and Paid-in Capital in Excess of Par - Preferred Stock are credited instead of the accounts for common stock.\r\n\r\nStock may be issued for assets other than cash, such as services rendered, land, equipment, vehicles, accounts receivable, and inventory. This is more common in small corporations than in larger ones. The journal entries are similar to those for issuing stock for cash. In this case, the value of either the stock or the asset must be known. The assumption is that both the asset and the stock have the same value. In other words, if land is known to be worth $300,000 and is transferred to the corporation in exchange for 15,000 shares of common stock, the journal entry would be:\r\n<table class=\"fin-table gridded\"><caption class=\"u-clearfix\">Journal<span style=\"float: right;\">Page XX<\/span><\/caption>\r\n<thead>\r\n<tr>\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"col\">Date<\/th>\r\n<th scope=\"col\">Description<\/th>\r\n<th scope=\"col\">Post. Ref.<\/th>\r\n<th scope=\"col\">Debit<\/th>\r\n<th scope=\"col\">Credit<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<td>20--<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\">Oct. 1<\/th>\r\n<td>Land<\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">450,0000<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct. 1<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Common Stock<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">150,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct. 1<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Paid in Capital in Excess of Par - Common Stock<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">300,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct. 1<\/span><\/th>\r\n<td>To record issuance of 15,000 shares of $10 par stock in exchange for land.<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nOn the other hand, if the fair market value of the land is unknown but the stock is trading for $20 per share, the journal entry would be:\r\n<table class=\"fin-table gridded\"><caption class=\"u-clearfix\">Journal<span style=\"float: right;\">Page XX<\/span><\/caption>\r\n<thead>\r\n<tr>\r\n<td colspan=\"5\"><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"col\">Date<\/th>\r\n<th scope=\"col\">Description<\/th>\r\n<th scope=\"col\">Post. Ref.<\/th>\r\n<th scope=\"col\">Debit<\/th>\r\n<th scope=\"col\">Credit<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<td>20--<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th scope=\"row\">Oct. 1<\/th>\r\n<td>Land<\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">300,0000<\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct. 1<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Common Stock<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">150,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct. 1<\/span><\/th>\r\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Paid in Capital in Excess of Par - Common Stock<\/td>\r\n<td><\/td>\r\n<td class=\"r\"><\/td>\r\n<td class=\"r\">150,000.00<\/td>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Oct. 1<\/span><\/th>\r\n<td>To record issuance of 15,000 shares of $10 par stock at $20 per share in exchange for land.<\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<td><\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nYou can review this material by watching the following video:\r\n\r\nhttps:\/\/youtu.be\/PvAVHdQ6ctk\r\n<div class=\"textbox tryit\">\r\n<h3>Practice Question<\/h3>\r\nhttps:\/\/assessments.lumenlearning.com\/assessments\/23829\r\n\r\n<\/div>","rendered":"<div class=\"textbox learning-objectives\">\n<h3>Learning Outcomes<\/h3>\n<ul>\n<li>Account for the issuance of stock<\/li>\n<\/ul>\n<\/div>\n<p><a href=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/5107\/2020\/10\/03234612\/conference-room-768441_1920.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"size-medium wp-image-5098 alignright\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/5107\/2020\/10\/03234612\/conference-room-768441_1920-300x200.jpg\" alt=\"A conference room table.\" width=\"300\" height=\"200\" \/><\/a><\/p>\n<p>Shares <strong>authorized<\/strong> is the number of shares a corporation is allowed to issue (sell). For a large corporation, this is based on a decision by its Board of Directors, a group elected to represent and serve the interest of the stockholders. Authorization is just permission to sell shares of stock; no action has actually taken place yet. Therefore, there is no journal entry for a stock authorization.<\/p>\n<p>Shares <strong>issued<\/strong> is the number of shares a corporation has sold to stockholders for the first time. The number of shares issued cannot exceed the number of shares authorized.<\/p>\n<p>Occasionally, a corporation will buy back its own shares on the open market. We call those retired shares <em>treasury stock<\/em>. The number of issued shares that are still circulating in the open market are referred to as\u00a0<strong>outstanding<\/strong>.<\/p>\n<p>Look at the most current <a href=\"https:\/\/ir.homedepot.com\/financial-reports\/annual-reports\/recent\" target=\"_blank\" rel=\"noopener\">regulatory reports for The Home Depot, Inc<\/a>. On page 33 of the 2019 annual report, the company reports the following components of stockholders\u2019 equity:<\/p>\n<div id=\"attachment_6005\" style=\"width: 1034px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-6005\" class=\"wp-image-6005 size-large\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/5107\/2020\/10\/17040554\/Screen-Shot-2020-11-16-at-8.05.43-PM-1024x564.png\" alt=\"See caption for link to long description.\" width=\"1024\" height=\"564\" \/><\/p>\n<p id=\"caption-attachment-6005\" class=\"wp-caption-text\">See the <a href=\"https:\/\/course-building.s3-us-west-2.amazonaws.com\/Financial+Accounting\/Long+Descriptions\/The+Home+Depot+CBS.txt\" target=\"_blank\" rel=\"noopener\">balance sheet long description<\/a> here.<\/p>\n<\/div>\n<p>Note this information as of the fiscal year that ended February 2, 2020:<\/p>\n<ul>\n<li style=\"font-weight: 400;\">The par value of the common stock is $0.05 per share.<\/li>\n<li style=\"font-weight: 400;\">The number of shares authorized is listed as 10,000, but all numbers except per-share data are listed in millions, so that is actually 10 billion shares authorized.<\/li>\n<li style=\"font-weight: 400;\">There were 1.786 billion shares issued by the end of the 2019 fiscal year (February 2, 2020).<\/li>\n<li style=\"font-weight: 400;\">The company had 709 million shares of treasury stock at the end of the year (for which they paid $65,196 million dollars, which is an average cost of almost $92 per share).<\/li>\n<li style=\"font-weight: 400;\">If we subtract the number of shares in treasury stock from the number of shares issued (1,786 &#8211; 709 = 1,077) we should get the number of shares outstanding, and we do.<\/li>\n<\/ul>\n<p>The terms above may be better understood with an analogy to a credit card. If you are approved for a credit card, the terms will include a credit limit, such as $5,000, which is the maximum you are allowed to charge on the card. This is similar to \u201cshares authorized,\u201d the maximum number of shares a company is allowed to issue. The credit limit on a card does not mean you have to charge $5,000 on your first purchase but instead that you may continue to charge purchases up until you have reached a $5,000 maximum. The same holds true for shares issued. Smaller numbers of shares may be sold over time up to the maximum of the number of shares authorized.<\/p>\n<p>If you wish to charge more than your credit limit on a credit card, you may contact the company that issued the card and request an increase in your credit limit. They may or may not grant this request. The same is true for a corporation. If it wishes to issue more shares than the number authorized, it may approach the Board of Directors with this request.<\/p>\n<p>From an accounting standpoint, issuing stock is similar to recording any other contribution of capital, except instead of crediting capital contributions, we credit the Common Stock account:<\/p>\n<table class=\"fin-table gridded\">\n<caption class=\"u-clearfix\">Journal<span style=\"float: right;\">Page XX<\/span><\/caption>\n<thead>\n<tr>\n<td colspan=\"5\"><\/td>\n<\/tr>\n<tr>\n<th scope=\"col\">Date<\/th>\n<th scope=\"col\">Description<\/th>\n<th scope=\"col\">Post. Ref.<\/th>\n<th scope=\"col\">Debit<\/th>\n<th scope=\"col\">Credit<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>20&#8211;<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">Oct. 1<\/th>\n<td>Checking<\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">150,000.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct. 1<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Common Stock<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">150,000.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct. 1<\/span><\/th>\n<td>To record issuance of 15,000 shares of $10 par stock at $10 per share<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>If the stock is sold on the open market for an amount greater than the par value, which is most often the case, the entry looks like this:<\/p>\n<table class=\"fin-table gridded\">\n<caption class=\"u-clearfix\">Journal<span style=\"float: right;\">Page XX<\/span><\/caption>\n<thead>\n<tr>\n<td colspan=\"5\"><\/td>\n<\/tr>\n<tr>\n<th scope=\"col\">Date<\/th>\n<th scope=\"col\">Description<\/th>\n<th scope=\"col\">Post. Ref.<\/th>\n<th scope=\"col\">Debit<\/th>\n<th scope=\"col\">Credit<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>20&#8211;<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">Oct. 1<\/th>\n<td>Checking<\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">450,000.00<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct. 1<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Common Stock<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">150,000.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct. 1<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Paid in Capital in Excess of Par &#8211; Common Stock<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">300,000.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct. 1<\/span><\/th>\n<td>To record issuance of 15,000 shares of $10 par stock at $30 per share<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>The journal entry for issuing preferred stock is very similar to the one for common stock. This time Preferred Stock and Paid-in Capital in Excess of Par &#8211; Preferred Stock are credited instead of the accounts for common stock.<\/p>\n<p>Stock may be issued for assets other than cash, such as services rendered, land, equipment, vehicles, accounts receivable, and inventory. This is more common in small corporations than in larger ones. The journal entries are similar to those for issuing stock for cash. In this case, the value of either the stock or the asset must be known. The assumption is that both the asset and the stock have the same value. In other words, if land is known to be worth $300,000 and is transferred to the corporation in exchange for 15,000 shares of common stock, the journal entry would be:<\/p>\n<table class=\"fin-table gridded\">\n<caption class=\"u-clearfix\">Journal<span style=\"float: right;\">Page XX<\/span><\/caption>\n<thead>\n<tr>\n<td colspan=\"5\"><\/td>\n<\/tr>\n<tr>\n<th scope=\"col\">Date<\/th>\n<th scope=\"col\">Description<\/th>\n<th scope=\"col\">Post. Ref.<\/th>\n<th scope=\"col\">Debit<\/th>\n<th scope=\"col\">Credit<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>20&#8211;<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">Oct. 1<\/th>\n<td>Land<\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">450,0000<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct. 1<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Common Stock<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">150,000.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct. 1<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Paid in Capital in Excess of Par &#8211; Common Stock<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">300,000.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct. 1<\/span><\/th>\n<td>To record issuance of 15,000 shares of $10 par stock in exchange for land.<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>On the other hand, if the fair market value of the land is unknown but the stock is trading for $20 per share, the journal entry would be:<\/p>\n<table class=\"fin-table gridded\">\n<caption class=\"u-clearfix\">Journal<span style=\"float: right;\">Page XX<\/span><\/caption>\n<thead>\n<tr>\n<td colspan=\"5\"><\/td>\n<\/tr>\n<tr>\n<th scope=\"col\">Date<\/th>\n<th scope=\"col\">Description<\/th>\n<th scope=\"col\">Post. Ref.<\/th>\n<th scope=\"col\">Debit<\/th>\n<th scope=\"col\">Credit<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>20&#8211;<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th scope=\"row\">Oct. 1<\/th>\n<td>Land<\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">300,0000<\/td>\n<td><\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct. 1<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Common Stock<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">150,000.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct. 1<\/span><\/th>\n<td>\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Paid in Capital in Excess of Par &#8211; Common Stock<\/td>\n<td><\/td>\n<td class=\"r\"><\/td>\n<td class=\"r\">150,000.00<\/td>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Oct. 1<\/span><\/th>\n<td>To record issuance of 15,000 shares of $10 par stock at $20 per share in exchange for land.<\/td>\n<td><\/td>\n<td><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>You can review this material by watching the following video:<\/p>\n<p><iframe loading=\"lazy\" id=\"oembed-1\" title=\"Issuing Stock Transactions and Calculating Paid-in Capital - Financial Accounting video\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/PvAVHdQ6ctk?feature=oembed&#38;rel=0\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<div class=\"textbox tryit\">\n<h3>Practice Question<\/h3>\n<p>\t<iframe id=\"lumen_assessment_23829\" class=\"resizable\" src=\"https:\/\/assessments.lumenlearning.com\/assessments\/load?assessment_id=23829&#38;embed=1&#38;external_user_id=&#38;external_context_id=&#38;iframe_resize_id=lumen_assessment_23829\" frameborder=\"0\" style=\"border:none;width:100%;height:100%;min-height:400px;\"><br \/>\n\t<\/iframe><\/p>\n<\/div>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-4286\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Issuing Stock. <strong>Authored by<\/strong>: Joseph Cooke. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Shared previously<\/div><ul class=\"citation-list\"><li><strong>Authored by<\/strong>: Free-Photos. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/pixabay.com\/photos\/conference-room-table-office-768441\/\">https:\/\/pixabay.com\/photos\/conference-room-table-office-768441\/<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/about\/cc0\">CC0: No Rights Reserved<\/a><\/em>. <strong>License Terms<\/strong>: https:\/\/pixabay.com\/service\/terms\/#license<\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":17,"menu_order":8,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Issuing Stock\",\"author\":\"Joseph Cooke\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"},{\"type\":\"cc\",\"description\":\"\",\"author\":\"Free-Photos\",\"organization\":\"\",\"url\":\"https:\/\/pixabay.com\/photos\/conference-room-table-office-768441\/\",\"project\":\"\",\"license\":\"cc0\",\"license_terms\":\"https:\/\/pixabay.com\/service\/terms\/#license\"}]","CANDELA_OUTCOMES_GUID":"9b106dfe-65e8-44bb-81d5-8bc33d14b48f, b87945f7-79fb-45ea-b2fd-883c78b852cf","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-4286","chapter","type-chapter","status-publish","hentry"],"part":805,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/4286","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/users\/17"}],"version-history":[{"count":11,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/4286\/revisions"}],"predecessor-version":[{"id":6632,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/4286\/revisions\/6632"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/parts\/805"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/4286\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/media?parent=4286"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/pressbooks\/v2\/chapter-type?post=4286"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/contributor?post=4286"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-clinton-financialaccounting\/wp-json\/wp\/v2\/license?post=4286"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}