Question

How to calculate balance in a common stock account?

Answer 1

As we know that a company can raise funds with the help of issuying common stock also, although there are other sources too but common stock is very popular source of raising funds. Thus preparing common stock account is very important.

Common stock is a liability for a company that is why beginning balance of common stock account start with credit. If a company further raise any funds then it also will be recorded on the credit side of common stock account. So all such further issue of common stock will be posted on the credit side of common stock account and at the end of year it will be balanced with a credit balance.

Let’s understand it with an imaginery example;

Common Stock Account
Debit	Credit
	$10000 Beginning balance
	$2000 new issue
	$1000 new issue
	$750 new issue
	$13750 Ending balance

   

Thus we see that beginning balance and all new issue of common stock are shown on the credit hence there will be a credit ending balance.