Difference between Par and No Par Value Stock

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Par Value Stock

Some states require common stock to have a par value.

No Par Value Stock

Stock without a required par value or stated value.

Accounting Entry for Preferred Stock with Par Value

Debit Cash, Credit 5% Preferred Stock.

Accounting Entry for No Par Value Stock

Debit Cash, Credit Common Stock.

Accounting Entry for Common Stock with Par Value

Debit Cash, Credit Common Stock—Par, Credit Paid-in Capital in Excess of Par.

Common Stock with Par Value

Par value and amount received are recorded separately.

Legal Capital

Par value is also referred to as the corporation's legal capital.

Preferred Stock

Par value of preferred stock is meaningful for dividend calculations.

Preferred Stock with Par Value

Par value used to calculate preferred stock dividends.

Dividends for Preferred Stock with Par Value

Preferred stockholders receive dividends based on par value.


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