Chapter 8 Handout.docx

# Comprehensive examples 10 common stock issuance best

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Comprehensive Examples 10. Common Stock Issuance. Best Co sells and issues 100 shares of its \$3 par value common stock at \$17 per share. Show how this transaction would be recorded in the accounting equation. Asset s = Liabilitie s + Stockholders’ Equity Revenu e - Expense s = Net Income Contributed Capital Retained Earnings = + 0 - = 11. Treasury Stock. ABC Co paid \$19.50 per share for 740 shares of its own common stock on March 30, 2011, and then resold these treasury shares for \$22.00 per share on April 25, 2011. A. Show the transaction on April 25, 2011 in the accounting equation. Asset s = Liabilitie s + Stockholders’ Equity Revenu e - Expense s = Net Income Contributed Capital Retained Earnings = + 0 - = B. What effect do these transactions have on the shareholders’ equity section of the balance sheet at April 30, 2011? ____________________________________________________________ 12. Equity Section of the Balance Sheet. ABC Endurance Company had the following stockholders’ equity section on December 31, 2010, balance sheet. Preferred stock, 4%, \$100 par, cumulative 1,150,000 Common stock, \$2.40 par value 450,000 Paid-in capital in excess of par, common stock 1,300,000 Retained earnings 2,100,000 Total \$5,000,00 0 A. How many shares of common stock are classified as issued? _________________________ B. How many shares of common stock are outstanding? _______________________________ C. How many shares of preferred stock are outstanding? _______________________________ D. What was the average selling price of a share of common stock? ______________________ Chapter 8 Handout, Page 7 of 8

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E. If \$46,000 of dividends was declared and there were no dividends in arrears, how much of the total would go to the common shareholders? ________________________________________________________________ __________________________________________________________________________ Chapter 8 Handout, Page 8 of 8
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