July 2: Cash 9,000,000
To Paid-In Capital in Excess of Par A/c 4,000,000
To Common Stock A/c 5,000,000
Common stock is recorded at par (1,000,000 shares × $5). Cash would be recorded as shares multiplied by the amount of cash paid. (1,000,000 shares × $9). Difference equals Paid-In Capital Exceeding Par Common Stock
More about Par Common Stock:
A single common share's par value is determined by the charter of a corporation. It usually has nothing to do with the shares' actual worth. Actually, it's frequently lower.
The par value is stated on each stock certificate that is issued for shares that are bought. A firm has the option to specify a par value when authorizing shares or not.
Learn more about Par Common Stock here:
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