IV. Test your understanding of the effect of equity transaction on the financial

Question

IV. Test your understanding of the effect of equity transaction on the financial statements

Indicate the effect on the financial statement categories/subcategories as follows:

I – increase; D = decrease; N = no effect.    Don’t leave any cells blank.

Transaction

Effect on Contributed

Capital (CC)

Retained Earning

Total Stockholders’ Equity

Net Income

Sold common stock

Declared cash dividend

Paid previously declared cash dividend

Declared and issued stock dividend

Declared property dividend; the property’s fair value is greater than its BV

Purchased common stock to be resold later

Sold TS in excess of cost

Resold TS below cost (APIC-TS available)

Retired common shares

Resold TS below cost (APIC – TS not available)

Transaction

Effect on Contributed

Capital (CC)

Retained Earning

Total Stockholders’ Equity

Net Income

Sold common stock

Declared cash dividend

Paid previously declared cash dividend

Declared and issued stock dividend

Declared property dividend; the property’s fair value is greater than its BV

Purchased common stock to be resold later

Sold TS in excess of cost

Resold TS below cost (APIC-TS available)

Retired common shares

Resold TS below cost (APIC – TS not available)

Explanation / Answer

Transaction Effect on Contributed Capital (CC) Retained Earning Total Stockholders’ Equity Net Income Explanation Debit Credit Sold common stock increase No effect Increase No effect Cash Common stock Declared cash dividend No effect Decrease Decrease No effect Retained Earnings Dividends Payable Paid previously declared cash dividend No effect No effect No effect No effect Dividends Payable Cash Declared and issued stock dividend increase Decrease Increase No effect Retained Earnings Common stock& addl.paid-in capital Declared property dividend; the property’s fair value is greater than its BV No effect Decrease Decrease Increase(Gain on appreciation of property Retained Earnings Property Purchased common stock to be resold later No effect No effect No effect No effect Treasury stock Cash Sold TS in excess of cost Increase No effect No effect No effect Cash Addl. Paid-in-capital &Treasury Stock Resold TS below cost (APIC-TS available) Decrease No effect Decrease No effect Addl. Paid-in-capital Treasury stock Retired common shares Increase No effect Increase No effect Common tock Treasury stock Resold TS below cost (APIC – TS not available) No effect Decrease Decrease No effect Addl. Paid-in-capital &Treasury Stock Treasury stock

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.