Deming contractors was involved in the following events involving stock during 2012: 1. Authorized to issue: (a)

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Deming contractors was involved in the following events involving stock during 2012:

1. Authorized to issue:

(a) 100,000 shares of $100 par value, 8 percent preferred stock;

(b) 150,000 shares of no-par, $5 preferred stock; and

(c) 250,000 shares of $5 par value, common stock.

2. Issued 10,000 shares of $5 par value common stock for $30 per share

3. Issued 10,000 shares of the $100 par value preferred stock for $150 per share

4. Issued 10,000 shares of no-par preferred stock for $50 each.

Prepare entries, if appropriate, for each event, describe how each event affects the basic accounting equation, and explain the economic significance of par value.


Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...
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