Review each of the following transactions that represents the components of the

Question

Review each of the following transactions that represents the components of the book value of common shareholders’ equity.  Indicate the impact as follows: (I = increase, D = decrease, or NE = no effect)

a. Issuance of $1 par value common stock at par value. (I have done the first one for you as a guide.)

b. Stock repurchased and placed in the treasury

c. Cash dividend declared.

d. Shareholders identified for dividend distribution on the date of record

e. Property dividend declared and paid.

f. Large stock dividend declared and issued.

g. Small stock dividend declared and issued.

h. 2-for-1 stock split announced and issued.

i. Stock options granted.

j. Recognition of compensation expense on stock options.

k. Stock options exercised.

l. Stock options expired.

m. Treasury stock acquired (company uses the cost method).

n. Treasury stock in transaction (reissued at an amount greater than original acquisition price).

o. Treasury stock in transaction (reissued at an amount less than the original acquisition price).

p. Restricted stock issued (grant date).

q. Recognition of compensation expense related to restricted stock.

r. Granting of stock appreciation rights to be settled with cash.

s. Recognition of compensation expense on stock appreciation rights.

t. Reacquisition and retirement of common stock at an amount greater than original issue price.

Review each of the following transactions that represents the components of the book value of common shareholders’ equity.  Indicate the impact as follows: (I = increase, D = decrease, or NE = no effect)

a. Issuance of $1 par value common stock at par value. (I have done the first one for you as a guide.)

b. Stock repurchased and placed in the treasury

c. Cash dividend declared.

d. Shareholders identified for dividend distribution on the date of record

e. Property dividend declared and paid.

f. Large stock dividend declared and issued.

g. Small stock dividend declared and issued.

h. 2-for-1 stock split announced and issued.

i. Stock options granted.

j. Recognition of compensation expense on stock options.

k. Stock options exercised.

l. Stock options expired.

m. Treasury stock acquired (company uses the cost method).

n. Treasury stock in transaction (reissued at an amount greater than original acquisition price).

o. Treasury stock in transaction (reissued at an amount less than the original acquisition price).

p. Restricted stock issued (grant date).

q. Recognition of compensation expense related to restricted stock.

r. Granting of stock appreciation rights to be settled with cash.

s. Recognition of compensation expense on stock appreciation rights.

t. Reacquisition and retirement of common stock at an amount greater than original issue price.

Item

Common Stock

Additional Paid-In Capital

Deferred Compensation

Retained Earnings*

Treasury Stock at Cost

Total Common Shareholders’ Equity

a.

I

NE

NE

NE

NE

I

b.

c.

d.

e.

f.

g.

h.

i.

j.

k.

l.

m.

n.

o.

p.

q.

r.

s.

t.

Doesn’t have to be an entry directly to retained earnings but can be the result of the income statement impact.

Item

Common Stock

Additional Paid-In Capital

Deferred Compensation

Retained Earnings*

Treasury Stock at Cost

Total Common Shareholders’ Equity

a.

I

NE

NE

NE

NE

I

b.

c.

d.

e.

f.

g.

h.

i.

j.

k.

l.

m.

n.

o.

p.

q.

r.

s.

t.

Explanation / Answer

Item

Common Stock

Additional Paid-in Capital

Deferred Compensation

Retained Earnings *

Treasury Stock at Cost

Total Common Shareholders’ Equity

a.

I

NE

NE

NE

NE

I

b.

NE

NE

NE

NE

I

D

c.

NE

NE

NE

D

NE

NE

d.

NE

NE

NE

NE

NE

NE

e.

NE

NE

NE

D

NE

NE

f.

I

NE

NE

D

NE

I

g.

I

NE

NE

D

NE

I

h.

NE

NE

NE

NE

NE

NE

i.

NE

NE

NE

NE

NE

NE

j.

NE

NE

I

NE

NE

NE

K.

NE

I

D

NE

NE

I

l.

NE

NE

D

NE

NE

NE

m.

NE

NE

NE

NE

I

D

n.

NE

I

NE

NE

D

I

o.

NE

D

NE

NE

D

D

p.

NE

NE

NE

NE

NE

NE

q.

NE

NE

I

NE

NE

NE

r.

NE

NE

NE

NE

NE

NE

s.

NE

NE

I

NE

NE

NE

t.

D

NE

NE

NE

NE

D

d. Identification of shareholders for dividend distribution does not require any entry. So no effect on the equity.

g. As the market value is not given, we cannot determine additional paid in capital.

h. When there is a stock split only number of shares outstanding and the par value of the share will change.

i. There will not be any journal entry on the date of grant for the stock options. At the end of the year and at the time of exercising or at the lapse of the options there will be journal entry.

p. Accounting for Restricted Stock Units are similar to Stock Options. So there will not be any entry on the grant date.

r. As the company grants the stock appreciation rights to be settled in Cash, then it is a rights liability. So there will not be any effect on the equity

Item

Common Stock

Additional Paid-in Capital

Deferred Compensation

Retained Earnings *

Treasury Stock at Cost

Total Common Shareholders’ Equity

a.

I

NE

NE

NE

NE

I

b.

NE

NE

NE

NE

I

D

c.

NE

NE

NE

D

NE

NE

d.

NE

NE

NE

NE

NE

NE

e.

NE

NE

NE

D

NE

NE

f.

I

NE

NE

D

NE

I

g.

I

NE

NE

D

NE

I

h.

NE

NE

NE

NE

NE

NE

i.

NE

NE

NE

NE

NE

NE

j.

NE

NE

I

NE

NE

NE

K.

NE

I

D

NE

NE

I

l.

NE

NE

D

NE

NE

NE

m.

NE

NE

NE

NE

I

D

n.

NE

I

NE

NE

D

I

o.

NE

D

NE

NE

D

D

p.

NE

NE

NE

NE

NE

NE

q.

NE

NE

I

NE

NE

NE

r.

NE

NE

NE

NE

NE

NE

s.

NE

NE

I

NE

NE

NE

t.

D

NE

NE

NE

NE

D

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

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