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The number of issued shares is recorded on a company's balance sheet as capital stock, or owners' equity, while shares outstanding (issued shares minus any shares in the treasury) are listed on the company's quarterly filings with the Securities and Exchange Commission (SEC).
Stock issuances DebitCash or other item received(shares issued x price paid per share) or market value of item receivedCreditCommon (or Preferred) Stock(shares issued x PAR value)CreditPaid in capital in excess of par value, common (or preferred) stock(difference between value received and par value of stock)
1. If the IPO is successful/approved, the cost of issuing the shares will reduce the additional paid-in capital/share premium; 2. If the IPO fails / is not approved, then the cost of issuing the shares must be classified as an expense.
How is common stock calculated? The formula for calculating common stock is Common Stock = Total Equity ? Preferred Stock ? Additional Paid-in Capital ? Retained Earnings + Treasury Stock.
A company issues common stock to raise money, so the debit will always be to cash. There will always be a credit to common stock for the # of shares issued x the par value. Additional paid-in capital (APIC) is the plug.