Principles of Financial Accounting · free preview
Securing Equity Financing through the Issuance of Stock
Corporations raise equity financing by issuing common and preferred stock, recording par value in the stock account and any excess as additional paid-in capital, in public offerings or private placements.
1. Equity versus debt financing
Equity versus debt financing
2. Common and preferred stock
Common and preferred stock
3. Recording issuance
Recording issuance
4. Public offerings and private placements
Public offerings and private placements
5. Equity advantage
What is the principal advantage of equity financing over debt?
6. Preferred preference
What does preferred stock typically receive before common stock?
7. Issuance entry split
A company issues 10,000 shares of 1 dollar par common stock for 15 dollars per share. Which entry is correct?
8. Noncash issuance
A company issues stock in exchange for land. How is the transaction recorded?
9. Additional paid-in capital
Stock is issued for 150,000 dollars, and the par value credited to common stock is 10,000 dollars. Compute additional paid-in capital in dollars, number only.
10. Issuance cost treatment
Costs of issuing stock, such as underwriting fees, are recorded as a reduction of the ____ from the issuance. One word.
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