3-Statement Change: Issue $100 of Stock

Walk me through what happens across the three financial statements when a company issues $100 of new stock for cash.

1. Task Overview

Task: trace the impact of a $100 stock issuance for cash across the Income Statement, the Cash Flow Statement, and the Balance Sheet.

Step 1: Given Data — The Transaction

A company issues new shares of common stock directly to investors in exchange for cash.

Step 2: Income Statement Impact

First, determine whether raising capital from shareholders is a revenue- or expense-generating event.

Using this formula, determine whether Net Income changes as a result of the stock issuance.

Step 3: Cash Flow Statement — Financing Activities

Next, classify where the $100 cash inflow belongs on the Cash Flow Statement.

Using this formula, compute the cash inflow from the stock issuance and the resulting change in cash for the period.

Step 4: Balance Sheet — Assets and Equity

Assume:

• Par value is nominal, so the full $100 is recorded across Common Stock and Additional Paid-In Capital (APIC)
• No transaction fees or underwriting discount

Using these inputs, compute the resulting change in Cash and in Common Stock/APIC, and confirm the balance sheet still balances.