Initial Public Offering (IPO)?
Elva asks:
I’m in a basic accounting class, and I have read the chapter and my notes but I don’t understand what I’m supposed to do.
I’m in a basic accounting class, and I have read the chapter and my notes but I don’t understand what I’m supposed to do.
a. Knight Corporoation issued 17,912,000, $0.375 par common shares in itis public offer (IPO) on June 15,2004.
At what price did Knight Corporation issue the shares in its IPO?
I tried preparing a journal entry with the Common Stock being 6,717,000 (17,912,000*$0.375), but I don’t know how that would help me figure out the price at which the shares were issued.
Knight Corporation is not a real company, just a made up example for this problem.
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You should have an APIC entry for the price per share * number of commons issued less the par. Add the APIC back to the par and divide by the number of shares issued that will give you the IPO per share price.
BTW APIC = Additional Paid Capital
Why didn’t you say it was fictitious?
Sorry, I checked all the Knights Corp. on the U.S. Exchanges. No IPO on the date you typed.
If you furnished the symbol and the exchange, perhaps you might get answers.
BTW, when I checked, there wasn’t any trading on June 15, ‘04.
Re-check your stats and dates.
VTY,
Ron Berue
Yes, that is my real name!