Dictionary / Paid-Up Capital
What does Paid-Up Capital mean in accounting?
Quick definition
Equity & capitalThe amount of money received from stockholders for capital stock issued, equivalent to the total of the par or stated value. This term guides how bookkeepers record, classify, and explain related transactions in routine financial reporting.
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Examples
You record only the par total
You run a pottery studio as an S-corp. On January 27 you issue 90 shares of common stock with a $10 par value and wire $13,480 from your personal account into the studio checking at the bank. Debit Checking $13,480, credit capital stock $900 (90 × $10), and credit paid-in surplus $12,580. Paid-up capital is that $900: cash received for issued stock, equal to the par total, not the $12,580 excess. In QuickBooks Online, split the deposit across those two equity accounts; do not put the whole $13,480 on the stock line.
A signed pledge is not paid-up
You run a bike shop as an S-corp. On September 29, a subscriber signs a subscription for 40 shares with a $5 stated value and pledges $6,750, but no cash has hit the shop account and you have not received a check. Paid-up capital is money received for issued stock, so the $200 stated total is not paid-up yet. If you credit capital stock $200 in Xero on the pledge date, you treat a promise as cash the corporation never received. Hold the certificates, or keep a subscriptions receivable, until the deposit clears; then credit the $200 stated amount as paid-up capital and the rest as paid-in surplus.
Why it matters
Paid-up capital is the money stockholders actually paid for issued shares, counted at par value or stated value, not the extra they paid above that face amount. You will not post this most months; it shows up when you form the corporation, issue certificates, or take in a new stockholder. Mix it with paid-in surplus and you dump the whole deposit on the stock line; mix it with issued capital stock and you count certificates instead of cash received; count a pledge or unpaid subscription as paid-up and the balance sheet shows money the shop never got. Keep paid-up capital for the par or stated amount that actually hit the bank, put the excess in paid-in surplus, and leave unpaid promises off that line.
Further reading
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What is Paid-Up Capital in bookkeeping?
The amount of money received from stockholders for capital stock issued, equivalent to the total of the par or stated value.
When should I use Paid-Up Capital?
Use Paid-Up Capital when the transaction facts match its definition and you need the ledger and financial statements to reflect the correct account and period.
What is a common mistake with Paid-Up Capital?
Paid-Up Capital is used for paid-up capital entries, while Paid-In Surplus covers a related but distinct bookkeeping purpose. Review both terms before posting unusual transactions. A common mistake is applying it by label only instead of checking the underlying transaction details.