360 - Capital Stock

360 – Capital Stock

Net Worth

Synopsis

Account 360

Debits	Credits
The par, or stated, value of both common and preferred stock that is retired or that is converted to or exchanged for preferred stock.	The par, or stated, value of both common and preferred stock issued and outstanding in exchange for cash or other property.

Remarks:

This account should be used only by dealers operating as a corporation.

Separate subsidiary records should be kept for each class of stock outstanding.

The balance in this account should be equal in amount to the outstanding stock as reflected in the appropriate stock certificate book.

Before engaging in transactions involving the corporation’s capital stock, the retailer should obtain legal and accounting advice relative to such transactions.

When a corporation purchases its own capital stock, the following should be observed:

If the stock is retired, its par or assigned value should be charged to this account. Amounts paid in excess of par or assigned value should be charged to Retained Earnings (Account 370). If purchased for less, the discount should be credited to Additional Paid in Capital (Account 365).
If the stock is not retired, it should be recorded at cost, in Treasury Stock (Account 361) and identified as Treasury Stock.

Note: