Payroll and equity Updated November 2026

Issuing stock

When a corporation issues shares for cash, it debits Cash for the proceeds, credits Common Stock for the par value of the shares, and credits Paid-in Capital in Excess of Par (APIC) for the amount above par. No-par stock credits the full proceeds to Common Stock; preferred stock follows the same pattern.

Syntax

Dr Cash (shares x issue price) / Cr Common Stock (shares x par), Cr Paid-in Capital in Excess of Par (remainder)

Part	What it is
`Common Stock`	Equity credited for the legal capital: shares issued times par (or stated) value.
`Paid-in Capital in Excess of Par, Common`	Equity credited for the issue price above par; also called Additional Paid-in Capital (APIC).
`Preferred Stock`	Credited at par for preferred shares, with its own excess-of-par account.
`Issue price`	What investors pay per share; par value has no relation to market value.

Examples

Dr Cash 150,000 / Cr Common Stock 10,000, Cr Paid-in Capital in Excess of Par, Common 140,000

Result: Equity up 150,000

10,000 shares of 1 par common stock issued at 15 per share.

Dr Cash 150,000 / Cr Common Stock 150,000

Result: Entire proceeds in Common Stock

10,000 no-par shares with no stated value issued at 15.

Dr Cash 104,000 / Cr Preferred Stock 100,000, Cr Paid-in Capital in Excess of Par, Preferred 4,000

Result: Preferred equity up 104,000

1,000 shares of 100 par preferred issued at 104.

Common mistakes

Crediting Common Stock for the full issue price when the shares have a par value: only par goes to Common Stock; the excess goes to APIC.
Recording revenue on a stock issue: proceeds from selling the company's own shares are equity, never income.
Valuing stock issued for an asset at par: use the fair value of the asset or of the shares, whichever is more clearly determinable.

Practice Issuing stock

These drills check your answer on live data, free, no account needed.

Issuing common stockLumen Robotics Inc. issues 15,000 shares of $1 par value common stock for $18 per share in cash.
Issuing preferred stockCoral Bay Resorts Inc. issues 2,000 shares of $50 par value, 6% preferred stock for $54 per share in cash.

Questions

What is the journal entry to issue common stock?

Debit Cash for the proceeds, credit Common Stock for par value times shares, and credit Paid-in Capital in Excess of Par for the difference.

What is par value?

A nominal legal amount printed on the stock certificate, often 1 or 0.01. It sets the Common Stock account balance and has nothing to do with market price.

What is additional paid-in capital?

The amount investors paid above par value, shown in equity as Paid-in Capital in Excess of Par.

Treasury stockHow to record share buybacks under the cost method: Dr Treasury Stock, Cr Cash. Reissuing above cost credits Paid-in Capital from Treasury Stock.
Cash dividendHow to record a cash dividend: Dr Dividends, Cr Dividends Payable on declaration; Dr Dividends Payable, Cr Cash on payment; nothing on the record date.
Owner investmentHow to record an owner investing cash or equipment: debit the asset received, credit Owner's Capital or Common Stock. Examples and common mistakes.
Retained earningsWhat retained earnings are, how net income and dividends change them, the closing entries that post to the account, the formula and what a deficit means.