Determine share price

Issuing more shares later on

Later on John and Mary 's business grew rapidly and the business owners now want to expand their business. The business then needs more capital and the business owners made and agreement with their financier, Jack. John and Mary agreed to let Jack invest in their corporation. However, since Jack was not the original incorporator and would not be taking as much risk as John and Mary did, John and Mary required Jack to pay $75 for each share of stock. Jack bought 25 shares at $75 price per share. Jack made a total investment of $1,875.

Now the corporate books and balance sheet looks like this:

Business owner	Number of shares	Price per share	Total investment
John	100	$10	$ 1,000
Mary	100	$10	$ 1,000
Jack	25	$75	$ 1,875
Total	225		$ 3,875

If you keep your corporate records in this manners, you will not need to calculate price per share. You will not see the direct relationship between the price per share and the number of shares outstanding. This bothers some business owners and they choose to report the shares in different ways using par value or stated value of shares.

Issuing shares with par value or stated value

If par value or stated value of shares are included, the corporate book and balance sheet will look like the following.

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