E15-7 (Effect of Treasury Stock Transactions on Financials) Sanborn Company has

Q: E15-7 (Effect of Treasury Stock Transactions on Financials) Sanborn Company has

# assets liabaities stockholders equity paid in capital retained earning net income 1 D NE D NE NE NE 2 I NE I NE D NE 3 I NE I I NE NE # assets liabaities stockholders equity paid in capital retained earning net income 1 D NE D NE NE NE 2 I NE I NE D NE 3 I NE I I NE NE

ID: 2358987 • Letter: E

Question

E15-7 (Effect of Treasury Stock Transactions on Financials) Sanborn Company has outstanding 40,000 shares of $5 par common stock which had been issued at $30 per share. Sanborn then entered into the following transactions. 1. Purchased 5,000 treasury shares at $45 per share. 2. Resold 500 of the treasury shares at $40 per share. 3. Resold 2,000 of the treasury shares at $49 per share. Instructions Use the following code to indicate the effect each of the three transactions has on the financial statement categories listed in the table below, assuming Sanborn Company uses the cost method: I 5 Increase; D 5 Decrease; NE 5 No effect. Stockholders

Explanation / Answer

assets

liabaities

stockholders

equity

paid

capital

retained earning

net income