Sold 4.800 shares of $42 par value 8% preferred stock at par. Declared the annua

ID: 2456057 • Letter: S

Question

Sold 4.800 shares of $42 par value 8% preferred stock at par. Declared the annual dividend on the preferred stock. Purchased 450 shares of preferred stock for the treasury at $53 per 'share. Issued 1.500 shares of $3 par value common stock in exchange for land valued at $103,000. Sold 268 shares of the treasury stock purchased in transaction c for $59 per share. Split the common stock 2 for 1. Show the effect (if any) of each of the above transactions on each financial statement category by selecting a plus (+) or minus (-) sign and the amount in the appropriate column. Do not show items that affect net income in the retained earnings column. (For the Treasury Stock column related to transactions c and e, enter the effect as it relates to Treasury Stock and not to the right-side of the accounting equation. For example, if the transaction causes an increase in Treasury Stock by $20,000, then enter the effect as +20,000.)

Explanation / Answer

Transaction

Cash

Other Assets

Liabilities

Paid-in-capital

Retained earnings

Treasury Stock

Net Income

+ 201600

- 201600

-Dividend amount

+Dividend Amount

- 23850

+ 23850

+ 103000

- 98500

- 4500

+ 15812

- 1608

- 14204

A stock split will not change the general ledger account balances and therefore will not change the dollar amounts reported in the stockholders' equity section of the balance sheet. (Although the number of shares will double, the total dollar amounts will not change.)