How do you record common stock?
The entry to record the issuance of common stock at a price above par includes a debit to Cash. Cash is increased (debit) by the issue price. The journal entry would also include a credit to both Common Stock (increased) and Paid-In Capital in Excess of Par–Common Stock (increased).
How do you record the retirement of treasury stock?
The company can make the journal entry for retiring treasury stock by debiting the common stock account at the par value and its additional paid-in capital account and crediting the treasury stock account if the reacquisition cost equals the amount the company received when the stock was originally issued.
How is common stock recorded on a balance sheet?
On a company’s balance sheet, common stock is recorded in the “stockholders’ equity” section. This is where investors can determine the book value, or net worth, of their shares, which is equal to the company’s assets minus its liabilities.
What is retirement of common stock?
Retiring common stock When a company retires some of its common stock, it purchases them from owners and reduces the number of shares issued and the number of shares outstanding. Such shares continue to be authorized shares and may be issued by the company again at a later date.
What are the two methods of accounting for treasury stock?
There are two methods of accounting for treasury stock: the cost method and the par value method.
Is common stock a liability or asset?
No, common stock is neither an asset nor a liability. Common stock is an equity.
Is common stock on the balance sheet or income statement?
Common stock is included on the income statement as well as the balance sheet.
Issuance of shares having no par value is recorded by debiting cash and crediting common stock or prefered stock. However if board of directors of the company assigns a value to shares orally, such value is called stated value and the journal entries will be similar to par value stock.