Effect of no-par common and par preferred stock on the horizontal statements mod
ID: 2390835 • Letter: E
Question
Effect of no-par common and par preferred stock on the horizontal statements model LO 8-4 Mercury Corporation issued 8,000 shares of no-par common stock for $20 per share. Mercury also issued 1,100 shares of $65 par, 6 percent noncumulative preferred stock at $75 per share. Required: Record these events in a horizontal statements model. In the cash flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Use NA to indicate that an element was not affected by the event.
Explanation / Answer
Answer
Balance Sheet
Income Statement
Cash Flow
Event No
Assets
Liabilities
Stockholder's Equity
Cash
=
+
Common Stock
Preferred Stock
Additional paid In Capital - Preferred Stock
Retained earnings
Rev.
-
Exp.
=
Net Income
Common Stock issued
$ 1,60,000.00
=
$ -
+
$ 1,60,000.00
$ -
$ -
$ -
-
$ -
=
$ -
$ 1,60,000.00
FA
Preferred Stock issued
$ 82,500.00
=
$ -
+
$ -
$ 71,500.00
$ 11,000.00
$ -
-
$ -
=
$ -
$ 82,500.00
FA
Totals
$ 2,42,500.00
=
$ -
+
$ 1,60,000.00
$ 71,500.00
$ 11,000.00
$ -
$ -
-
$ -
=
$ -
Balance Sheet
Income Statement
Cash Flow
Event No
Assets
Liabilities
Stockholder's Equity
Cash
=
+
Common Stock
Preferred Stock
Additional paid In Capital - Preferred Stock
Retained earnings
Rev.
-
Exp.
=
Net Income
Common Stock issued
$ 1,60,000.00
=
$ -
+
$ 1,60,000.00
$ -
$ -
$ -
-
$ -
=
$ -
$ 1,60,000.00
FA
Preferred Stock issued
$ 82,500.00
=
$ -
+
$ -
$ 71,500.00
$ 11,000.00
$ -
-
$ -
=
$ -
$ 82,500.00
FA
Totals
$ 2,42,500.00
=
$ -
+
$ 1,60,000.00
$ 71,500.00
$ 11,000.00
$ -
$ -
-
$ -
=
$ -
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