Question

When companies offer new equity security issues, they publicize the offerings in the financial press and on Internet sites.

Answer 1

Solution:

Common stock: These are the common shares that a company issues to creditors to raise funds. In return, creditors are entitled to a dividend share of the profits received by the firm.

Par value: It refers to the worth of a share suggested by the charter of the company. Often referred to as a portfolio face value.

Record the sale of common stock in the books of ANIT Corporation.  

Date     Account Titles and Explanation    Debit (S)     Credit (S)

                        Cash (1)                             101,595,000

                 Common Stock (2)                                          7500

   Paid-in Capital in Excess of Par value (3)               101,587,500

(To record safe of .5 million shores of $0.001 par value per share in excess of Par)  

Compute the amount of cash received from common stock issue.  

Cash received = Number of shares issued x Price per share

                        = 7.500,000 shares x $13.546

                        =$101,595,000  

Compute common stock value.  

Common H= 'Number of shares v Par value of common stock stock value  

                  = 7,500,000 shares x SO 001 per share

                  = $7,500  

Compute paid-in capital in excess of par value.  

Paid-in capital in = I (Cash received—excess of par value Common stock value

                           =$101,595.000(1) — S7,5001.2)

                           = $101,587,500