Hot Water, Inc., manufactures a variety of dry cleaning equipment. Listed below are five events that occurred during the current year:

1. Declared a $5 per share cash dividend.

2. Paid the cash dividend.

3. Purchased 1,000 shares of treasury stock for $37 per share.

4. Reissued 600 shares of the treasury stock at a price of $36 per share.

5. Declared a 5 percent stock dividend.

Instructions

a. Indicate the effects of each of these events on the financial measurements listed in the four column headings listed below. Use the following code letters: I for increase, D for decrease, and NE for no effect.

b. For each event, explain the reasoning behind your answers. Be prepared to explain this reasoning inclass.

Transcribed Image Text:

Net Cash Flow (from any source) Current Assets Stockholders ncome Net Equity Event