Common Stock:
Information Given:
Par value of each common stock = $1.00
Issued = 10,000 shares of Common Stock
Issue price = $5.50 per share
So, Common Stock-Additional Paid in Capital per share = Issue price of each share – Par value of each share
= $5.50 - $1.00
= $4.50 per share
Each account would increase by,
Cash = 10,000 shares × $5.50 = $55,000
Common Stock = 10,000 shares × $1 = $10,000
Common Stock-Additional Paid in Capital = 10,000 shares × $4.50 = $45,000
Preferred Stock:
Information Given:
Par value of each preferred stock = $1.00
Issued = 1,000 shares of Preferred Stock
Issue price = $7 per share
So, Preferred Stock-Additional Paid in Capital per share = Issue price of each share – Par value of each share
= $7 - $3 = $4 per share
Each account would increase by,
Cash = 1,000 shares × $7 = $7,000
Common Stock = 1,000 shares × $3.00 = $3,000
Common Stock-Additional Paid in Capital = 1,000 shares × $4 = $4,000
Note: Additional paid in capital refers to the amount of money that a company’s stockholders pay for stocks in excess of the par value of the stocks.
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