Difference between Par and No Par Value Stock
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.