Indicate the effect (+, -, or 0) on total stockholders’ equity of McKenzie Servi

Question

Indicate the effect (+, -, or 0) on total stockholders’ equity of McKenzie Services Corporation for each of the following: 1. Declaration and Issuance of a stock dividend on common stock. 2. Sales of 100 shares of McKeinze services by Jay Smith to RayFauley. 3. Net earnings for the period of $600,000 4. Issuance of stock dividend on common stock. 5. Failing to declare a regular dividend on cumulative preferred stock. 6. Declaration of a cash dividend of $50,000 in total 7. Payment of item 6 8. Purchase of 10 shares of treasury stock for $1,200 cash 9. Sale of treasury stock, purchase in item 8, for $1,400 10. Sale of treasury stock, purchase in item 8, for $1,000.

Explanation / Answer

Solution:

Transaction Effect on total stockholder's equity 1.Declaration & issuance of stock dividend - 2. Sales of shares by Jay Smith 0 3. Net earnings + 4. Issuance of stock dividend - 5. Failing to declare of preferred dividend 0 6. Declaration of cash dividend - 7. Payment of dividend 0 8. Purchase of Treasury stock - 9. Sale of Treasury stock + 10. Sale of Treasury +

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