Final answer:
The company raises a total of $100,000 in capital by issuing 10,000 shares at the par value of $10 each. This is calculated by multiplying the number of shares by the par value.
Step-by-step explanation:
The total capital raised from the stock issuance is $100,000, calculated by multiplying the number of shares (10,000) by the par value ($10).
When a company issues stock at par value, the amount of capital raised is straightforward to calculate. The par value is a nominal value assigned to a share of stock and is the minimum price that shares can be issued for. In this case, the company has sold 10,000 shares at a par value of $10 each. To determine the total capital raised, we multiply the number of shares by the par value per share.
Capital Raised = Number of Shares × Par Value per Share
Capital Raised = 10,000 shares × $10/share
Capital Raised = $100,000
This capital is typically recorded in the company's books as 'common stock' or 'share capital' on the balance sheet and represents equity financing. Equity financing through stock sales is an essential means for companies to raise funds for operations, investment, and growth without incurring debt.