Accounting for stock issuance, splits, and treasury stock

(Learning Objectives 3, 5, & 6) 20–25 min.

Consider each of the following transactions separately from every other transaction:

a. Issuance of 58,000 shares of $14 par common at $22.

b. Purchase of 1,100 shares of treasury stock (par value at $0.50) at $6 per share.

c. Issuance of a 10% stock dividend. Before the dividend, 550,000 shares of $1 par common stock were outstanding; market value was $3 at the time of the dividend.

d. Sale of 300 shares of $1 par treasury stock for $7 per share. Cost of the treasury stock was $4 per share.

e. Split stocks 4-for-1. Prior to the split, 90,000 shares of $3 par common stock were outstanding.

Requirement 1. Identify whether each transaction increased, decreased, or did not change total stockholders’ equity.

AppendixLO1