Question

Dellinger Incorporated issued 100,000 shares of no-par common stock with a stated value of $7 per share. How would the accounting for these shares differ if they had instead issued no-par common stock without a stated value?

Answer 1

If the shares issued did not have a stated value, then the full amount of money received would have been credited to the Common Stock account. If the issued shares have a stated value, the stated value must be credited to the Common stock account and any additional money received must be credited to Paid in Capital in Excess of Stated Value account, which is similar to the Pain in Capital in Excess of Par account. If the company received less money than stated, the Paid in Capital in Excess of Stated Value account should be debited.